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Margin Debt, part II
Posted By Barry Ritholtz On January 18, 2007 @ 11:44 am In Investing,Markets,Psychology | Comments Disabled
We mentioned earlier  the recent rise in Margin. Have a look at the following chart:
NYSE Member Firm Margin Levels
The raw numbers are not what actually matter — and adjusting for inflation isn’t significant.
The reason Margin matters is that it is potentially revealing of extreme sentiment and/or speculation (margin clerks can do major damage in a downturn).
There are a few ratios I would like to identify and convert to oscialltors relative to Margin:
Total Margin / Total Market Cap
NYSE Margin / Account Assets
Margin / Trading Volume
Total Margin / Market Volatility
The idea would be to test these versus historical tops and bottoms . . .
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URL to article: http://www.ritholtz.com/blog/2007/01/margin-debt-part-ii/
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