Zeev:
Related info. I seems that Margin debt is stalled at 165 B.
nyse.com
It peaked in Mar 00 at 278 B. On the plus side no more margin call selling or additonal fight from stocks appears to be in the cards and additional margin debt will lead to higher equity prices.
On the minus side, a significant part of the market rally that started in APR 01 at the bottom appears to be somewhat dependent on this additional borrowed money. This is easy to see by looking at MD dramatic increases from 1995 to Mar 00 at the same time broad indexes did their 20%+ annual rise. Declines from Mar 00 in market indexes are proportinal to reduction in MB.
As long as investors have confidence to borrow on equities values to buy more equities this market will rise higher from here. Most people will not reduce their margin debt unless the world caves in like did in last 12 months. I feel the worst is over and any dip will be short lived in nature since new money or additional borrowed money will come in.
A good part of the $ 2T in MM funds may stay there until things look safe with the economy leading to additional rise in market upon that money's arrival to the party.
john
New York Stock Exchange Member Firms
Customers' Margin Debt
January 1992 through April 2001
Year/Month Debit Balances Free Credit Balances Free Credit Balances
(yymm) in Margin Accounts in Cash Accounts in Margin Accounts
200009 250,780 74,766 70,960
200010 233,380 73,410 82,990
200011 219,110 74,050 96,730
200012 198,790 84,400 100,680
200101 197,110 81,380 90,380
200102 186,810 78,660 99,390
200103 165,350 77,520 106,300
200104 166,940 77,460 97,470
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