Meanwhile, Margin Debt Tops $1 Trillion

While everyone is celebrating the first fed rate cut in 2025, margin debt very quietly tops $1 Trillion.

Huh?

Yes, you read that right.

Investors have leveraged their portfolios to the tune of over $1 Trillion on the New York Stock Exchange.

In addition, Nasdaq valuations have hit a historic extreme… now the highest ever relative to GDP.

 

Why is this important?

 

A lot of this is fueled by Fed-driven liquidity and frenzied speculation.

And many investors will falsely assume that rates are going to continue to fall, thereby allowing the cost of borrowing to be cheaper.

As a result, they will be inclined to leverage their accounts even more.

And that’s a big mistake…HUGE.

Because there is always an outlier event that comes out of nowhere (Cough! Generated by the Boyz in the “Club” Cough! Cough!) that drops a bomb in the Punchbowl,

 

READ:  Like a Turd in the Punchbowl (HERE).

 

So, for now, try to imagine what it will be like when margin calls hit and foreclosures start.

 

The expression “a nosebleed drop” comes to mind.

 

Unfortunately, a massive selloff is amplified when margin calls kick in and the Big Boyz are forced to dump billions more just to meet their margins and avoid going bankrupt.

And the ripple effect is how the little guy (who is likely NOT on margin) gets his account beat up in the process.

 

Tops $1 Trillion

 

But who loses most when margin calls on $1 Trillion kick in.

History shows us that the sectors that have experienced the biggest run up in value –combined with excessive P/E ratios and valuations – are usually the hardest hit.

 

Translation:  AI will be the first to see $1 Trillion in market value disappear.

 

Adding insult to injury, after the damage has been done, we will likely see interest rates go up…cancelling all the hope/hype of the FED bailing out the markets.

 

But the good news is, whenever there are wild market “Dislocations,” opportunities spring up in many sectors.

And they represent opportunities of a lifetime…for those with “ears to hear” …and especially those with cash on the sidelines.

 

Are You Listening?

 

 

As we have said many times in the past “The 1% Needs the 99% to Be Wrong” in order for them to make fortunes at YOUR expense.

Don’t be their victim.

Instead, have some cash ready to take advantage of what could easily happen with Margin Debt Topping Over $1 Trillion.

In the meantime, be sure to read our Short and Sweet Tips article “When to Take Profits” (HERE).

 

Share this with a friend…especially if they think AI is unstoppable and they are leveraged on margin. They’ll thank YOU later.

 

And tell them:

 

We’re Not Just About Finance

But we use finance to give you hope.

And you shall know the truth,

And the truth shall make you free

 

~ John 8:32 ~

 

 

And don’t forget: