Barrons has interviewed Michael Belkin, the man who counsels the largest sovereign wealth funds, hedge funds, pension funds, and institutional money in the world, and his warning may foreshadow a stock market collapse.
Here is a portion of the interview from Barrons: Michael Belkin called the 2000 market top. Now the publisher of the Belkin Report, an institutional newsletter on asset allocation…is waving a warning flag about the level of margin debt on the New York Stock Exchange.
Margin debt is the loans banks and brokerages make to investors, using their stock- and bond-holdings as collateral. In November, it neared an all-time high of $507 billion and has hovered close to that level since. “It’s something that’s hanging over the market,” he says. “The market is addicted to debt.”
There’s a precedent for a high level of margin debt foreshadowing a market collapse. It peaked in March 2000, congruent with the market’s March 24 top and subsequent 49% decline. And it peaked again in July 2007, a few months before the market top in October. Another disturbing factor: The percentage rise in margin debt over the latest bull market is 193%, exactly the increase from 2002 to 2007, when the financial crisis began and the Standard & Poor’s 500 index later fell 57%.
The problem with margin debt is that it causes a cascade effect. As the market falls, investors get margin calls on their loans and have to sell stocks to maintain their margin-debt minimum. ***KWN has released the remarkable audio interview with Michael Belkin, the man who counsels the biggest money on the planet, discussing the mining shares, gold, silver, global markets, and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: What Is Happening Right Now Is Madness CLICK HERE.
