e last addressed Margin debt back in September 2003.
At that time, we noted that margin was only modest, and represented little
danger to the market. As the chart below shows, Margin has scaled up
significantly. At present, while Margin debt is 20% below its 2000 peak, it’s
the highest it has been since early ‘01.

NYSE Member Firms’ Client Margin
click for larger chart

Margin_march_05

Source: NYSE

It is at the greatest spread relative to the Nasdaq since
the last time we last addressed the issue. Margin debt holds the additional
risk of “forced selling” into any further weakness. As we saw post-2000, the
daily liquidations exacerbated the downward movement as the markets collapsed.


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Quote of the Day:

"I have no special talents. I am only passionately curious."
-Albert Einstein

Category: Markets, Trading

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.

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