Posts filed under “Psychology”
A belated entry:
"Even last year’s lackluster stock-market gains encouraged investors to borrow money to trade stocks, sending so-called margin debt to its highest level in years.
As tracked by the New York Stock Exchange, margin debt at exchange-member companies rose 7.5% from the end of 2004 through November, the most recent month for which figures are available.
The Big Board’s data show that debit balances in margin accounts of customers of NYSE-member securities firms reached $219.02 billion in November, up from $203.79 billion in December 2004. December 2005 numbers will be available later this month.
As of November, margin debt as tracked by the NYSE stood at its highest level since November 2000, when margin debt was at $219.11 billion. Despite the rise, margin debt still is below the peak of $278.53 billion, which was set in March 2000, when the Nasdaq Composite Index reached its record.
Market analysts track margin-debt activity as an indication of investors’ appetite for speculative trading. A potential pitfall for those trading "on margin" is a sharp decline in stock prices, which can expose investors to "margin calls," requiring them to post additional collateral or brokers may sell their securities.
Note: I posted this on 1/18/05 becuase I forgot to publish it back on 1/3
Margin Debt Hits 5-Year High
GASTON F. CERON
DOW JONES NEWSWIRES, January 3, 2006; Page R6
As promised, today brings us to the 4th in our series of charts: P/E vs S&P500 click for larger chart courtesy of Mike Panzner, Rabo Securities > I’ll get into the significance of what this means to the markets later, but for now, note where the P/E is over the median, and its impact on…Read More
Have a look at this 100 year (actually, 105-Year) chart. I colored each “Market” appropriately — Green for Bull, and Red for Bear — to more clearly show what happens. Bull markets get ahead of themselves. At their ends, they tend towards excesses that take a very long while to recover from. When a long…Read More