Margin Loans Make a Comeback

Thursday, April 20, 2006 | 11:30 AM

Our parade of anecdotal evidence continues. Next up a WSJ article on Margin Loans.

"As borrowing costs increasingly pinch consumers, Wall Street is pushing loans backed by individual investors' brokerage portfolios to fund purchases ranging from vacation homes to new cars.

Such borrowings, often known as margin loans, were used extensively in the dot-com era by investors seeking to bulk up their portfolios with additional securities, but they fell from favor after the market crash. Now, as the stock market climbs back, margin loans are gaining renewed popularity. But brokerage firms say investors are increasingly using securities-based loans as a quicker and cheaper way to pay for a variety of purchases, not just more stocks and bonds."

There is a silver lining:

"Investors don't seem to be borrowing against their securities portfolios as much as they did during the dot-com boom. At Schwab, margin balances today represent 0.81% of total client assets, well below the 2% of client assets the firm saw in 2000. Analysts say the use of margin loans has been rising in line with the broader market's gains, indicating there is little speculative froth to the increased borrowing. In total, margin debt at New York Stock Exchange member companies, as tracked by the exchange, was $222.78 billion in February, the most recent month for which figures are available, up from $173.22 billion at the end of 2003. That compares with a peak of $278.53 billion of margin debt outstanding in March 2000."

This implies we are not quite at the top yet . . .


Margin Loans Make a Comeback
WSJ, April 20, 2006; Page D1

Thursday, April 20, 2006 | 11:30 AM | Permalink | Comments (6) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



TrackBack URL for this entry:

Listed below are links to weblogs that reference Margin Loans Make a Comeback:


hello sir,

I really like your blog. please visit my new blog on "Successful investing".


Posted by: Aditya Kumar Singh | Apr 20, 2006 11:50:27 AM

The comments to this entry are closed.

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™