The amount of money borrowed from brokerages that do business on the New York Stock Exchange to buy stock rose 3.6 percent to a second straight monthly record, reaching $295.9 billion in February. Margin debt, as the borrowing is called, in January broke the prior high set at the peak of the so-called Internet bubble.

Changes in the level of margin debt have mirrored those of U.S. stock indexes. After setting an all-time high of $278.5 billion in March 2000, margin debt dropped to less than half that amount by September 2002. It reached $285.6 billion in January

http://bigpicture.typepad.com/comments/200...margin_hit.html

only a matter of time for this... :-)



http://immobilienblasen.blogspot.com/

here is a more optimitic view

http://www.minyanville.com/articles/index.php?a=12412



http://immobilienblasen.blogspot.com/

http://immobilienblasen.blogspot.com/2007/...snt-matter.html

here is a good take from rodger rafter

Bunch of hooey, if you ask me.

The title is a pretty good give away that it is an attempt to rationalize away the precarious situation of hoards of overleveraged small investors. The article isn't saying margin debt doesn't matter so much as it is saying those in cash will come to there rescue.

That's not how I expect things to shake out.The heavily marginated are ripe for a fall, just as they were in 2000. Sure, there's a bunch of cash sitting in accounts, but that will probably grow rapidly like it did from 2000-2002 if the market gets bearish enough. Look at the chart and you'll see it wasn't until the end of the bear market that the smart money went to work.

The real question should be why cash in accounts has been rising lately. Cash was on the rise from 1998 to 2000, as it has been lately. There's been too much liquidity flowing into the market, with not enough good buys left out there. LBOs have been putting cash into investor's hands at a ridiculous rate and many have had the sense to just sit on it rather than pay too much for what's out there.

People who are smart enough to be in cash now will probably be smart enough to wait out much of the coming downtrend as they did earlier in the decade.

thanks rodger!

http://immobilienblasen.blogspot.com/

Could you please tell me where you get these charts from. Nice data to keep an eye on.

Thanks

WallstreetCourier.com produced both charts on Feb 25th. Here's what they had to say on the issue:

(February 25th) The Charts of Interest below show you the the amount of money borrowed from brokerages that do business on the New York Stock Exchange to buy stock. NYSE margin debt, as the borrowing is called, reached a record $285,6 billion in January, topping the prior all-time high of $278,5 billion set at the peak of the so-called Internet bubble in March 2000. Afterwards margin debt dropped to less than half that amount by September 2002. Available cash has declined to a negative $39 billion last month, among the lowest since November 2000. Previous declines of this magnitude, in July 2005 and April 2006, had preceded stock market dips. But there is still some room left until we reach the reading of February 2000, when available cash declined to a negative $129 billion.

They base their views on a massive collection of sentiment measures. I have to say they are pretty sharp cookies, and I've watched them for about 4 years now. Their dominant stance is neither bull nor bear, but contrarian. I've seen then them call the market at 180 degrees to the guru prevailing view and win again and again. The service costs about £30 for 6 months. They largely concern themselves with leading US indicies, tho they do make calls on commodities.

They believe the ice is getting a little thin at the moment, and see a a pull-back or consolidation ahead. But they don't see that as the start of a bear market.

Meanwhile, most of the quick money has likely been made from the recent dip in ftse, with money betting the market will rise dominating. I include my own flavour of open interest for your delectation.

So, as I said on the 17 April:

"... most of the quick money has likely been made from the recent dip in ftse, with money betting the market will rise dominating. I include my own flavour of open interest for your delectation."

Only two days ago the market had yet to surpass the high on the day I wrote that (my prediction of no more quick money for a while), but Wall Street Courier's heads up on sentiment in America, the technical situation (all time high still unbroken, strong momentum), and the pearls-before-swine that is my equity open interest sentiment chart, have caused the market to give me little by way of surprises, despite the fact that everyone and his uncle have been predicting a market meltdown since the decline in March.


Can't imagine anyone is interested in making money in the markets, so I won't bother with another OI chart. When somebody shows an interest that'll be my cue to sell everything! LOL