Monday, September 01, 2014

The Joy of Volatility

The Telegraph notes that the level of margin debt that traders are using to buy shares in the stock market reached the highest levels on record, according the latest data from the New York stock exchange.

US traders borrowed $460bn from banks and financial institutions to back shares, and once cash and credit balances held in margin accounts of $278bn is subtracted this left net margin debt of $182bn in July

Traders are now more exposed to a fall in share prices than at the height of the dot-com bubble at the turn of the century, and just before the financial crisis during the 2007 peak.

The Telegraph's article goes on to almost push for a collapse in the market. However, even if the media gets its way (disasters do make great headlines), the world will survive and move on. Markets have crashed many times before, and they will continue to do so.

Money is made from volatility.

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