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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (29225)	4/25/2000 11:30:00 PM
From: advinfo	Read Replies (1) \| Respond to of 42523

...with just a liiitle bit of help from Goldman Sachs -g-

To: BGR who wrote (29225)	4/25/2000 11:32:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 42523

not yet. the Nasdaq remains about 1,400 points below the high scored in late March. it's a bit early to celebrate victory. note that since the other, broader indices have basically made zero progress over the past year, neither side can claim victory at this point. one fallacy about comparing margin debt to market cap is that the debt, once incurred, is of a certain size, while market cap can fluctuate wildly. up to 40% in a single week as '87 has shown. or 25% in a single week as has recently happened with the Nasdaq. as for the comparison to '29, while it is true that margin regulations were comparatively lax (though not as lax as is commonly believed...read the excellent account of the 1920's bull market and its aftermath on the PEI web site for details), nowadays people have many more avenues to incur debt to have money available to play the market. everything from second mortgages to credit cards is used. don't forget that the average 401K is used as collateral for credit of about 50% of its value for example. once again, the debt is a fixed amount, the value of the 401K is not. household debt in the US now stands at an all time record of 105% of disposable income. considering that the savings rate is negative, i would say that a serious market swoon could seriously imperil a lot of people's financial health. to come back to the issue of margin debt, the growth in margin debt has been excessive of late, of that there can be no doubt. and still, in spite of this acceleration in margin debt and the massive inflows into mutual funds this year, the broad market has actually gone nowhere. it means that insiders are cashing out, and the public is using debt to help them do so. not exactly inspiring. bearmarketcentral.com this chart speaks for itself...