As for Securities Market Credit, this upwards procession is nearing the 2007 high’s highlighting the hubris as the S&P 500 Price Index keeps ripping new highs:
Zooming to 2009 to present for clarity:
As for Investor net worth, we’re at the lowest levels since the beginning of 2006. Note the tumble in net worth in September 2008, the period of Lehman’s bankruptcy. If an errant AP Tweet can destroy 1% of US index values within 4 minutes, what is to prevent a total sell off in the face of real, net-negative tone, news and there is no support for prices? The robots are levered up and the every time the system overloads, nearly every participants pull back which leads to a vacuum.
The lack of a base in this market in the form of the general American public highlights how fragile things really are. With the S&P 500 and Dow 30 at or near highs, the evidence is clear this performance has been driven through levered up beta chasing strategies operated primarily by the 2/20 hedge fund industry. The following chart shows the growth in Margin Credit compared to performance of the S&P 500 Price Only Index which is being ramped up on borrowed money:
So, even though the returns YTD feel wonderful to the point you may be penning a thank you letter to Ben Bernanke, be forewarned that this is what I would call the Lance Armstrong Effect where cheating has induced beyond-expected performance which will subsequently be viewed negatively by future individuals looking back.