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Quarterly Newsletter - Summer 2014

Thus far, it has been a strange year in the markets.  For a short while, it seemed as if the positive returns of 2013 were simply going to continue and, by mid-February, the S&P 500 in America was at an all-time high.  However, there were already signs that markets were becoming nervous about the rapid rise of prices in the technology and biotech sectors whilst a few commentators were also becoming concerned at the rapid expansion of margin debt as continued low interest rates drove people towards equities in a search for yield.
Margin debt basically represents the amount of money investors have borrowed from their stockbrokers in order to gear up their buying capacity.  It serves as a good indicator as a high margin debt often coincides with the peak of a stock market index.  To put this recent development into context ...