{"id":463519,"date":"2017-03-31T20:27:17","date_gmt":"2017-03-31T20:27:17","guid":{"rendered":"http:\/\/juniorminingnews.com\/?p=463519"},"modified":"2017-03-31T20:27:17","modified_gmt":"2017-03-31T20:27:17","slug":"investors-notch-an-ominous-record-2","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=463519","title":{"rendered":"Investors Notch an Ominous Record"},"content":{"rendered":"
<\/a><\/div>\n

By Brian Maher<\/a><\/span> <\/p>\n

<\/div>\n

This post Investors Notch an Ominous Record appeared first on Daily Reckoning.<\/p>\n

The market stumbles these days and a rainbow forms in the skies over Wall Street.<\/p>\n

Just another chance to buy the dips.<\/p>\n

The Dow’s up about 200 this week after last Friday’s health care adventure.<\/p>\n

And why not?<\/p>\n

For eight years dip buyers have been rewarded royally for their efforts.<\/p>\n

Will this time be different?<\/p>\n

It was John Templeton \u2014 Sir John Templeton \u2014 who said bull markets are born on pessimism, grow on skepticism, mature on optimism\u2026 and die on euphoria.<\/p>\n

Eight years in\u2026 has this bull market finally passed the optimism phase\u2026 and entered euphoria?<\/p>\n

We consider one possible sign today\u2026<\/p>\n

Think of the crash of 1929 and what springs to mind?<\/p>\n

Shoeblacks\u2026 paper slingers\u2026 taxi hacks, all giving the hottest stock tips?<\/p>\n

Yes, maybe that. But also something else\u2026<\/p>\n

Margin buying.<\/p>\n

Investors borrowing money to buy stocks. Buy now\u2026 pay later. (And pay they would.)<\/p>\n

Margin buying became so common that by the time the crash came along, some 90% of the purchase price of a stock was made with borrowed money.<\/p>\n

A fellow with $1,000 could try his luck with up to $10,000 worth of stock.<\/p>\n

Then the crash.<\/p>\n

Margin buyers not only lost their button-downs with their Windsor-knot ties\u2026 they were in hock for every last cent they borrowed.<\/p>\n

In a word, ruined. Most stayed ruined.<\/p>\n

We mention this only because The Wall Street Journal brought us up short yesterday with a stray item of news\u2026 a passing item almost lost among the indrift\u2026<\/p>\n

It said margin debt hit a record high last month.<\/p>\n

Investors borrowed $528.2 billion against their brokerage accounts, according to the latest the New York Stock Exchange data, out Wednesday.<\/p>\n

Margin debt was $513.3 billion in January.<\/p>\n

The Journal further informs us that \u201cthe previous record high for margin debt was $505 billion in the spring of 2015\u201d \u2014 just ahead of the August correction that sent stocks careening more than 10%.<\/p>\n

\u201cA steep rise can indicate that investors are losing sight of market risks and betting that stocks can only go up,\u201d says the Journal in words too obvious for print.<\/p>\n

\u201cMargin debt has a history of peaking right before financial collapses like the ones in 2000 and 2008,\u201d warns the Journal.<\/p>\n

Just so.<\/p>\n

Then this question: Are today’s margin buyers simply tugging on Fate’s cape\u2026 courting Her wrath?<\/p>\n

John Hussman of the eponymous Hussman Funds argues that current stock valuations now rival their 2000 peak.<\/p>\n

He also says they’re \u201cmore than double the historical norm\u2026 and about 160% above pre-bubble norms.\u201d<\/p>\n

What kind of losses could return valuations to their historic norms?<\/p>\n

\u201cPut simply,\u201d warns Mr. Hussman, \u201cthe U.S. equity market could lose $17 trillion in value \u2014 over 50% of its market capitalization \u2014 even without taking reliable valuation measures below their historical norms.\u201d<\/p>\n

For emphasis: \u201cWe estimate that roughly half of U.S. equity market capitalization \u2014 $17 trillion in paper wealth \u2014 will simply vanish.\u201d<\/p>\n

Come the day\u2026 we only hope the windows are nailed shut\u2026<\/p>\n

More than a few unexpected visitors \u201cdropped in\u201d on Wall Street in October ’29.<\/p>\n

But not everyone is concerned about today’s \u2026read more<\/a> <\/p>\n

Source:: Daily Reckoning feed<\/a><\/p>\n

The post <\/a>Investors Notch an Ominous Record<\/a> appeared first on Junior Mining Analyst<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Brian Maher This post Investors Notch an Ominous Record appeared first on Daily Reckoning. The market stumbles these days and a rainbow forms in the skies over Wall Street. Just another chance to buy the dips. The Dow’s up about 200 this week after last Friday’s health care adventure. And why not? For eight […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/463519"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=463519"}],"version-history":[{"count":0,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/463519\/revisions"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=463519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=463519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=463519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}