20th April
Despite an equity market that didn't go anywhere in March, margin debt jumped another 2% and free credits sank more than -5%. That's the largest one-month drop in free credits in two years.
Free credits are equivalent to cash that's available for customers to use for whatever they wish, such as buying more stock, or withdrawing to buy a car, a vacation, or anything else that tickles their fancy.
When we subtract those free credits from margin debt to come up with a "net worth" or, as we've always called it on the site, Available Cash, we're now down to -$75.2 billion.
There have only been two periods in history where investors' Available Cash was this low - June 2007 and November 1999 - October 2000 (the red dots on the chart above). Neither of those were great periods to be taking on margin debt along with the others.
When we express Available Cash as a percentage of the market capitalization of the S&P 500, the current figure of -0.61% was matched or exceeded only by the spring and fall of 2000 during the past 20 years.
This data is becoming increasingly bothersome for the long-term health of the market.
No comments:
Post a Comment