Bending the Third Rail
Because We Should, We Can, We Do
Wednesday, April 11, 2007
I just heard on CNBC that margin debt is at a new high. Margin debt is money borrowed by investors (read: speculators) to buy/short stocks. It also means that the market rally is being fueled by credit. This is ok as long as the market goes up. But if, or I should say "when", the market begins to fall (and it WILL fall), the fall could be precipitious as folks rush to the exits to cover their loans.