When happy go lucky CNBC personalities start bantering about the risk, you know the suicidal leverage and anemic trading volumes must be outright freakish…
Big moves in a handful of stocks provided traders with a worrying signal—an “ultra-high” level of leverage in the stock market. “People must be three or four times normal leverage,” Cashin said. “We’ve seen margin accounts go up. We knew the hedge funds were playing. But to see extreme moves like that on nonspecific news tells me there’s a lot of leverage out there. … If we start to get a protracted move, it could get very volatile.” Here is a direct video link.
For some historical reference on just how ‘bat-shit-crazy’ current leverage levels are today, here’s the updated chart again since 1995. But gee…300%+ leverage worked out so well the past couple of peaks, what’s to fear this time, right?
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