FYI: Plunging margin debt may not doom the bull market after all, reports to the contrary notwithstanding.
Margin debt is the total amount investors borrow to purchase stocks, which historically has risen during bull markets and fallen during bear markets. This total fell more than 6% in October, according to a report last week from FINRA. We won’t know the November total until later in December, though I wouldn’t be surprised if it falls even further.
A number of the bearish advisers I monitor are basing their pessimism at least in part on this plunge in margin. It’s easy to see why: October’s sharp drop brought margin debt below its 12-month moving average. (See accompanying chart.)
Regards,
Ted
https://www.marketwatch.com/story/this-bear-market-signal-is-throwing-stock-investors-off-the-scent-2018-11-27/print
