Stock Market and Margin Accounts Are Hitting Highs: Time to Panic?

"In the short run, the market is a voting machine, but in the long run, the market is a weighing machine." -- Benjamin Graham

Reading Graham's quote today, it's apparent the populace is voting overwhelmingly in favor of a continued market rally, but the real question to ask is, "When will the market weighing machine vote 'no' and send shares tumbling?" To attempt an answer to this age-old dilemma, we'll look at margin account debt balances, which just recently hit a decade record high in April. In the following video, Fool analyst Blake Bos explains what margin debt is, whether these debt balances can predict a sell-off, and how he's placing his investment bets in today's heated market.

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  • Report this Comment On August 05, 2013, at 9:23 PM, ralphrides wrote:

    yes and 10 year treasury interest is over 2.65% and 30 year is 3.75% so not only is margin up but the interest to pay for it is up. add the fact that share value on bonds is down so holders of these assets for collateral are rapidly loosing margin loan strength and lenders are reducing loans for traders to use to buy equities.

  • Report this Comment On August 06, 2013, at 8:25 AM, TMFBos wrote:

    @ ralphrides

    Great points sir, it will be very interesting to track this in the coming months especially as you see those borrowing cost increase.



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