Deja Vu'
derryb
Posts: 36,825 ✭✭✭✭✭
People are using borrowed money to buy stock like its 2007 or 1999
"The conclusion of the note is rather simple – today’s euphoric borrowing on margin to buy stocks is reminiscent of past bubbly equity market periods."
"The conclusion of the note is rather simple – today’s euphoric borrowing on margin to buy stocks is reminiscent of past bubbly equity market periods."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
0
Comments
Know when to walk away, know when to run." It's easy to buy securities, but learning when to sell, is the difficult part.
I guess if they loose a lot of money on the pending downturn, that will make me fell like I lost less.
I'm not prepared for the stock market downturn.... Doah...
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i> People are using borrowed money to buy stock like its 2007 or 1999
"The conclusion of the note is rather simple – today’s euphoric borrowing on margin to buy stocks is reminiscent of past bubbly equity market periods." >>
This never stopped but slowed way, way down in 2008-2009.
At some point the people will realize the U.S. economy is 20% smaller than the one we're trying to prop up with QE, ZIRP, and deficit spending. That underlying $13 trillion economy has many strengths and solid organizations within it. Continuing to prop the other 20% will only accelerate the decline.
I saw this first hand in the store, many of these people now are in so deep they don't know whether to keep hanging on or give up
<< <i>It's not about the borrowing of money to buy stocks, it's about the larger than normal amount being borrowed to buy stocks. >>
According to the chart there is a near perfect corrolation so I see nothing larger than normal.
However if we wish to truly dissect the info we would find that in 2000 people were paying 6% margin interest to buy internet stocks in the hope of ever increasing capital gains. Today people are paying 1% interest to buy stocks with 4% dividend yields. A much different and efficient use of capital.
Now none of that doesn't mean the stock market can't drop. If it did, then it would prove that stocks are just another asset class, like gold, in which people can and do lose money.
Knowledge is the enemy of fear
<< <i>No different than the countless number of people that were buying PM's with credit cards and home mortgage loans when silver was 40 plus and gold 1800.
I saw this first hand in the store, many of these people now are in so deep they don't know whether to keep hanging on or give up >>
How true. There was a guy on another site (TF Metals or something like that) was encouraging people to get a few new credit cards that have no interest for 12 months like he did, max them out on silver and pay them off when silver was 60 or 70 dollars an OZ. Silver was around $45 then. I told him he was nuts. After silver dropped to around $30, I went back and posted on the thread asking out his plan worked out. Didn't here a peep. I am sure he is long gone now!!!