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There is an article in the 3/30/17 Wall Street Journal, titled "Bullish Investors Binge on Loans." It starts off, "Margin debt climbed to a record in February..." Peaks over (an admittedly back-fitted range) of, say, 50 to 60 in Figure 4 of Yardeni Research's "Stock Market Indicators: Margin Debt" may have some value as prior indicators of bear markets. http://www.yardeni.com/pub/stmkteqmardebt.pdf
Didn't know Yardeni was still kicking. Unless I'm mistaken he joined Oak Associates for a while, but I could be mistaken. Not sure what he is famous far in previous life. He still seems to me milking his name well.
Anyways, not sure how to use the indicator though. I mean if I "read" it right now, we should all be out of the market right?
VF, homing in on Figure 4 of the Yardeni piece, you could get out of the market when the curve hits 50 or 60 on its way up, or later, when it hits 60 or 50 on its way down. A comparison of those points in 2000 and 2007 for the stock market versus how it subsequently performed would be in order. Then you would need a Bull Market Indicator to tell you when to get back in the market.
More on Stimulus/Credit tightening as well as hikes in interest rates:
What is so disturbing is that each extra dollar of new debt now generates just $0.17 of extra GDP in the US, down from around $0.75 in the 1960s. Much of the corporate debt built up in this cycle has been to buy back stock or pay dividends.
@bee. Yeah I think I heard someone say this on NPR couple of weeks back. Stock Prices have been influenced more because of cheap money funneled into buybacks rather than producing any economic benefit.
But as you know, this time is different. Sure. We will have different percentage downturn in the stock market. There are times I feel it might be catastrophic if it does not happen until 3rd year of Presidency. 3rd years are when they pull out all stops to make sure things stay "good" while they are campaigning. Better take a 20% correction before 2018. If we wait till 2020, who knows what will happen.
Also, didn't someone post article on MFO about subprime autoloan problem being the same size as the home subprime problem?
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Anyways, not sure how to use the indicator though. I mean if I "read" it right now, we should all be out of the market right?
But as you know, this time is different. Sure. We will have different percentage downturn in the stock market. There are times I feel it might be catastrophic if it does not happen until 3rd year of Presidency. 3rd years are when they pull out all stops to make sure things stay "good" while they are campaigning. Better take a 20% correction before 2018. If we wait till 2020, who knows what will happen.
Also, didn't someone post article on MFO about subprime autoloan problem being the same size as the home subprime problem?