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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (6103)	8/20/2007 7:49:02 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 50538

re: ["The public isn't much involved these days or years in the stock market. It is well known, and has been, that the public is all in re."] I'm sorry, but that is just 110% completely wrong. Individual investor use of margin set all-time records, virtually month after month, from January right up through this correction. It exceeded the levels of the tech and internet bubble of 1998-2000. I pounded the table on this months ago... Here's the facts: ====================================================================== blogs.wsj.com February 20, 2007, 3:27 pm Buying (and Buying) on Margin Posted by David Gaffen Here’s something that isn’t exactly a feel-good indicator for the sentiment inspectors: Margin debt has hit an all-time high, surpassing the heady days of the technology stock boom, as more people borrow money to buy stocks than ever before. ======================================================================== bigpicture.typepad.com Margin Levels Hit New Record Thursday, February 22, 2007 \| 11:32 AM Here's a data point to make you stop and think: According to the NYSE, margin totaled $285.61 billion in January, up from $275.38 billion in December and passing the previous peak of $278.53 billion. ========================================================================== Sources:Nick Baker Bloomberg, 2007-03-19 14:39 NYSE Margin Debt Advances 3.6 Percent to Second Straight Record. ============================================================================ As market slides, investors who borrowed money to buy stocks must pony up cash. By Madlen Read ASSOCIATED PRESS 2:25 p.m. August 16, 2007 NEW YORK -- They are dreaded words on Wall Street, and they're becoming more common: margin call. More money invested in the stock market is borrowed from brokers than ever before, and some investment houses are asking for theirs back through what are known as margin calls. It's one of the reasons why Wall Street sold off so sharply in recent days. “It's being referred to as the biggest global margin call in history,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. A flood of margin calls is typical in a market correction, he said, and “it can turn small declines into large declines. That's why leverage is dangerous.” When a stock dips below a certain point, brokers who lent investors money through margin agreements demand that the investors sell part of the stock or pony up cash to cover losses. When that happens, investors often have to liquidate other assets, which can magnify stock market drops. It's also partly why the selloff in equities is hurting other markets, like metals and energy. Investors are “margined out, and that's exacerbated the selling,” said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. “People are just selling everything. It's a downward spiral.” Margin debt on the New York Stock Exchange was at a record $378 billion as of June, up 36 percent from the previous peak in 2000 of $278 billion, according to Schaeffer's data. Margin debt on the Nasdaq Stock Market is also at a record $30 billion, up 33 percent from the 2000 level of $20 billion. The NYSE's level of margin debt has surged 37 percent just this year -- the biggest six-month increase since April 2000. ....the numbers don't account for hedge funds who borrow money from banks and aren't NYSE member firms. Furthermore, there's margin debt in other markets, like bonds, and other factors at play -- investors taking their yen out of dollar-denominated assets, for example. ====================================================================== But! Margin is not the real story. Do you know what is? Cash. Because record levels of CASH are sitting on the sidelines, right here -- right now. Record levels of CASH in the hands of individual investors. And record levels of CASH in the coffers of U.S. Corporations. Once the dust settles from this correction, and the Fed starts cutting rates - to where banks can once again borrow short and lend long -- profitably... potentially, it's back to the races. After all... how long was the collective memory from the bursting of the internet & tech margin bubble in 2000? Or, from the last subprime meltdown... in 1998-1999? Never underestimate the addiction of those... doomed by their own DNA. Keep your eye on the prize... because they are. And the only way they get the "prize" is if the DOW starts flying once again. You don't necessarially need to fear your opponent, but you sure as hell had better respect both him...and his arsenal. Especially, if your opponent is the Fed and Wall Street insiders. SOTB