Stock Market Leverage is at Dangerous Levels
Stock Market Leverage is at Dangerous Levels. As the chart below from Advisor Perspective’s Jill MIslinski shows investor negative credit balances in margin accounts these days dwarf the negative balances that preceded big market declines of the last ten years. Why should we worry about that? Stock drops precipitate margin calls from brokers. These drops often force investors to sell their stock. Today’s enormous amount of margin debt, therefore, could greatly exacerbate a future downturn. Investors are forced to sell to meet margin calls.