It’s funny when there’s a notable monthly drop in margin debt because it is usually an involuntary drop driven by market conditions or even redemptions. I get to laugh now as someone who spent a lot of my twenties on the receiving end of margin calls for speculative client accounts. Very glad to be out of that game.
Anyway, here’s my friend Peter Boockvar with the latest on NYSE margin debt totals:
Likely reflecting the drawdown on some of the most expensive areas of the stock market, NYSE margin debt in March fell by $15.4b from February to $450.3b vs $451.3b in December and $444.9b at year end 2013. As a percent of nominal GDP, it comes to 2.6% vs 2.7% last month and compares with 2.6% seen in July 2007 and 2.8% reached in March 2000. As a comparison on the flip side, at the market trough in March ’09 and just before the economic bottom, margin debt to nominal GDP was 1.3%. As I said last month on the February figure, “this data doesn’t tell us where markets go in the very short term but does say a lot about the leverage that is in the market that has helped to get us here,” we now know where many of the leveraged stock trades were in, aka biotech, cloud computing, 3d printing and social media.
Managing Director, Chief Market Analyst
The Lindsey Group LLC