NYSE Shows Margin Debt Keeps Hitting New Highs


The New York Stock Exchange and other exchanges are winning from the rebound in stock markets to new all-time highs. There may be one issue of concern, and that is that as stocks keep going up so does the margin debt.

A table from the NYSE shows that margin debt hit yet a record high of $423.7 billion in November. This already hit a new high of $412.459 billion in October, and it puts the streak for higher borrowings at five consecutive months.

After going further back on the NYSE margin tables, it turns out that margin debt has been more than $400 billion for three straight months, and that same margin debt at the NYSE has not been less than $300 billion since August of 2012.

Does higher borrowing alone constitute a bubble in the stock market? No it does not. There are many reasons that investors use margin. Some are good, some are not. You will want to keep an eye on this into 2014 because we are coming off the best year for stocks in more than a decade.

As of Monday, the S&P 500 Index was up about 28% and the Dow Jones Industrial Average was up about 27% so far in 2013.

Filed under: Banking & Finance

Originally published