There’s always been a fairly close correlation between margin debt and stock market performance. Prior to 2007 the two would shadow each other with a bit of a gap. In the post bust period since 2007 margin debt and the S&P 500 or Standard and Poors 500 Index have more or less moved in lockstep based on data from Doug Short Advisors and the New York Stock Exchange and using current Dollars. Margin debt hit an all-time high in April of 2015 at a record 507.2 billion dollars. It has since slipped to 447.3 billion as of June, a decline of almost 12%. Over the same period the S&P 500 halted its advance and went more or less sideways until earlier this month when it broke to the upside. Margin debt peaked in 2000 at 2.7% of Gross Domestic Product or GDP, again in 2007 at 2.6% of GDP, today it stands at 2.8% of GDP. Just another item on the long list of “ahem” things to ignore if you’re an equity investor.
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