THE LMTR EDGE:

Join over 25,000 investors and get alerts for:
  • Market Timing Reports
  • Sentiment Updates
  • Chart of the Week
  • Weekly Podcasts
  • The Magic Number - Top Stocks

Huge Margin Debt Hangs Over the Stock Market Like the Sword of Damocles

As the chart below shows, investors have racked up huge margin debt in the hopes of increasing performance in a rising market. But that huge debt overhanging the stock market by a thread like the sword of Damocles means greater risk on the downside. That’s because the heavy use of margin, which often occurs at the end of a bull run, exacerbates the downturn when investors are forced to sell shares to avoid or satisfy margin calls.

Huge Margin Debt Hangs Over the Stock Market Like the Sword of Damocles
Huge Margin Debt Hangs Over the Stock Market Like the Sword of Damocles

Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

Leave a Reply

Your email address will not be published. Required fields are marked *

2018 - All Rights Reserved © LMTR, LLC

Privacy Policy - Contact Email: info@lmtr.com