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This from ~2 months ago ...
September 17, 2003
SAN FRANCISCO (CBS.MW) -- A fivefold increase in margin debt at
Nasdaq member firms prompted market data provider TrimTabs.com to
warn Wednesday that "the bubble is back" in U.S. stocks. Margin debt
rose to $26 billion at July 31 from $5.1 billion at Dec. 31 -- adding
$19 billion in June and July alone. That figure represents 15 percent
of the total outstanding, compared to 7.1 percent in March 2000.
TrimTabs' warning follows regulatory agency NASD's investor alert
Monday that trading "on margin" is up 25 percent year-to-date and
many investors may underestimate the risks. The NASD alert suggests
that Nasdaq members are being required to tighten margin rules after
a period of relaxation, TrimTabs said. "When a loosening becomes a
tightening, the affected stocks collapse. That is in part what
happened in early 2000 when the Nasdaq tightened margin requirements
on some of the more aggressive stocks."
--- In amibroker@xxxxxxxxxxxxxxx, Yuki Taga <yukitaga@xxxx> wrote:
> This from today's Nihon Keizai Shimbun:
>
> > With the unrealized profit/loss rate of shares bought in margin
> > trading by individuals having widened to a negative double-digit
> > percentage, those traders are becoming less and less prepared to
> > accept risks, observers note.
>
> Now ordinarily, you might think this is a stunning statistic given
> the 225's advance since April, but there is a mitigating fact you
may
> not know (and which the article doesn't explain, either): Margin
> contracts in Tokyo are for a *maximum* term of 6 months. The
position
> can be "rolled over", but you have to actually close it and open a
> new one by the six month term. So, nobody is sitting on any
> *original* long positions opened more than 6 months ago; most of
them
> would have had to take profits and reestablish new positions, or
will
> soon be forced to do so. Therefor, a lot of margined profit has been
> taken off the table (or rolled over into new positions with
> substantially less paper profit, if any), and that may account
> somewhat for the dismal retail balance right now.
>
> But still, that percentage is really dismal. ^^_^^ It means to me
> that the average retail margin position being held right now was
> established somewhere not too far from the very top of the current
> formation. In any case, Mr. Margin Call is going to be paying some
of
> these folks a visit in the near future, and the market has a
terrible
> record of coming to the rescue of these folks. Quite the contrary,
> here is the news in our big financial paper; who do you think might
> be getting ready to take advantage of this? A sharp drop from here,
> even temporary, would blow a lot of longs out. A quick return and
> then another drop to the same level (say below 9800) would probably
> push a lot more over the cliff who didn't jump the first time.
>
> Anyone know what the margin balances look like in the US these days?
>
> Yuki
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