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NYSE Margin Debt at All-Time High
Why the stock market is like the 2006 housing bubble

By Bob Stokes
Fri, 29 Nov 2013 12:30:00 ET
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Investors using ten to thirty times leverage have pushed stocks to new highs. Thanks to the Fed's easy money, banks are loaning wealthy speculators boatloads of money, and in turn, they are buying stocks. 

In March 2013, New York Stock Exchange margin debt was near an all-time record. Now, margin debt is at a record high.
 
 
 
Hedge funds aren’t the only entities using leverage in record amounts. Individuals are using it, too. [The chart above] shows that margin debt at brokerage firms has now reached an all-time high. Leveraged buying by institutions and margin buying by individuals explains how the averages ... got to where they are. It’s just another big debt-financed bubble, like the one in housing that ended in 2006.
 
-- The Elliott Wave Theorist, November 2013
 
Credit expansion fueled real estate mania to unsustainable levels until the bubble burst.
 
Is the Fed helping to create yet another asset bubble?
 
Federal Reserve Chairman Ben S. Bernanke and his central-bank counterparts ... have bet the run-up in stock and home prices they’ve engineered would boost consumer and corporate confidence and spur faster growth and higher inflation. Now they’re having to maintain or intensify their aid -- running the risk those efforts do more harm than good by boosting equity and property prices to unsustainable levels.
 
-- Bloomberg, Nov. 13
 
Even before NYSE margin debt reached a historic high, a major bank observed:
 
“Investors have rarely been more levered than today,” said Deutsche Bank, warning that the spike in margin debt is a “red flag” and should be watched closely. ... It said the equity rally may have further legs but it cited “astonishing similarities” between the latest patterns and events preceding prior market crises.
 
-- The Telegraph, Aug.13
 
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