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HEADLINE: Whenever Margin Debt Goes Over 2.25% Of GDP The Stock Market Always Crashes
What do 1929, 2000 and 2007 all have in common? Those were all years in which we saw a dramatic spike in margin debt. In all three instances, investors became highly leveraged in order to "take advantage" of a soaring stock market. But of course we all know what happened each time. The spike in margin debt was rapidly followed by a horrifying stock market crash.
The article shows that whenever people leverage their stock purchases so much that it reaches 2.25% of GDP, the market crashes soon afterward.
In 2007 the leverage figure was $381 billion, and the market then crashed.
In April 2013, the last month where we have figures, the amount had reached $384 billion, which is 2.4% of GDP. The Wall Street Journal sees this as a good sign showing investor confidence. The New York Times, however, sees it as an ominous sign from past experience.
Dr. Stephen Jones has been writing blog posts since 2005 on a variety of topics from Bible Studies to World News, and he has been writing books since 1992. Dr. Jones' most important writings came after God brought him back into the full-time ministry in 1991. It is here that all his earlier years of searching the Scriptures began to come into clear focus. He combines a knowledge of the Old and New Testaments with a personal revelation of God that began and developed during the "wilderness" period of his life, which he often refers to as God's True Bible College... Read More
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