Debt, or more specifically Margin Debt which is used to add more gasoline to an investment position is at all time highs…
For the record, we rarely use or recommend the use of Margin Debt, but watch it for tells of investor behavior.
Margin Debt Analysis
Margin Debt is the lending of money in an investment account against securities owned, for the additional purchase of more securities. Think leverage and gasoline on an investment portfolio…
Margin is mostly used by professional investors, but has gained some attention of the new, very young investors…
While amplifying returns on the up side, it does just the opposite on the down side as well.
This Data from the Margin Debt portion of FINRA a broker regulatory agency
While a long term monthly graph, again from FINRA and not adjusted for GDP or Inflation, it is easy to see downward moves in capital markets cause Margin to decrease.
While at an all time high, many investors who may have never felt a real down capital market may be over their skis….
Not to worry, we will keep you posted on this, as we have in the past!
Have a Great “Margin Debt Update” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth