“One common sign of trouble ahead is people borrowing heavily to buy equities.... Investors should be worried then that stocks are being
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”supported by record amounts of margin debt, according to research released last week from the Bank for International Settlements...
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“...loans secured against stocks have often proved dangerous in a downturn b/c when share prices fall borrowers are forced to sell.”
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“Rich clients’ desire to borrow against stocks has been stoked by the low interest rates and rising stock markets...attractive for banks,too
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“Lending against shares is seen as less risky than mortgages because stocks can be sold more quickly than a house, so banks can hold less
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“capital against margin loans. Also, if the borrowed money is invested with the bank, rather than spent...boosts assets under management.”
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