Not ironically, U.S. margin debt also hit an all-time high yesterday. American investors had a total of $353 billion in IOUs floating in the market in May, up 11% from April. A coincidence? We think not.
“Investors are quite optimistic right now,” says a favored newsletter writer, “But this level of debt also shows how vulnerable they are to a decline. Such leverage will only magnify their losses, should the market not continue its rise. If you have any kind of a contrarian streak, you have to look at those numbers and think we're due for a dip.”
A fellow at the blackjack table, taking out a $10,000 advance so he can double down is a “degenerate gambler”; on Wall Street, in today’s parlance, he’s called an “investor.”
“Investors are quite optimistic right now,” says a favored newsletter writer, “But this level of debt also shows how vulnerable they are to a decline. Such leverage will only magnify their losses, should the market not continue its rise. If you have any kind of a contrarian streak, you have to look at those numbers and think we're due for a dip.”
A fellow at the blackjack table, taking out a $10,000 advance so he can double down is a “degenerate gambler”; on Wall Street, in today’s parlance, he’s called an “investor.”
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