Jeff Opdyke has a WSJ article on Margin this am: Deja Vu: Buying Stock on Margin Is Back in Vogue. His reporting specifically notes a big increases in online broker’s margin:
Wednesday, online firm E*Trade Group Inc. reported that margin debt had increased to $1.23 billion, an increase of about 25% this year. Jarrett Lilien, president and chief operating officer at E*Trade, says the margin growth his firm has seen “is growing orderly and responsibly.”
Online competitor Ameritrade Holding Corp. saw margin activity increase 46% to $1.9 billion between March and June. Brown/Co, a unit of J.P. Morgan Chase & Co., says its margin balance has risen about 20% so far this year in accounts that have a margin balance.
The article quotes yesterday’s research piece, and more importantly, repeats my complaint how incomplete the present margin data is:
The increase in margin debt “suggests that smaller investors have become extremely speculative again,” says Barry Ritholtz, market strategist at Maxim Group, a medium-size brokerage firm in New York. “If I had to bet, I’d say a disproportionate amount of [buying on margin] is in tech, biotech and Internet stocks, just like last time.”
Brokerage firms and regulatory agencies don’t detail what stocks investors are buying on margin. But Ken Clipper, chief executive officer of Brown/Co, says anecdotal evidence shows that the Nasdaq 100 Index Tracking Stock, also known as the Triple Qs for its QQQ symbol, “is our No. 1 product.” Mr. Clipper says it wouldn’t be a stretch to think that “savvy customers are playing the Q’s” on margin.
If you read yesterday’s margin comments (NASD Firm Margin Levels Spikes to Record Levels), you’ll note I reach a somewhat different conclusion than the other people quoted in the article. Because the total amount of margin — NYSE and NASD firms combined — has not really moved up much, and is still way below the bubble peak — I doubt this signls an impending top or major reversal.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.