You might not have noticed, but Washington robbed U.S. pension plans with a “hidden” law called MAP-21. Here’s why it’s like a “deal with devils.”
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How Congress and Obama Robbed U.S. Pension Plans with Map-21
Margin Buying Surpasses 2007 Danger Levels – Is Another Market Crash Coming?
It's called buying on margin, and it's soaring as the market continues its tear and speculative investors seek a piece of the action. As your stocks appreciate you can borrow even more. A market rally lets you expand your portfolio by piling on more debt.
But it's potentially dangerous and could portend a stock market crash.
As the accompanying chart shows, historically there has been a direct link between a surge in margin loans and corresponding stock market peaks - followed by sharp declines in the markets.
So it's no small matter of concern that the Financial Industry Regulatory Authority reports the amount owed on loans secured by investments climbed to a record high $384 billion at the end of April.
That topped the previous high - $381 billion in 2007, not coincidentally, just before the financial meltdown and the Great Recession.
As a percentage of the economy, the latest margin borrowing totaled 2.71% of gross domestic product.
By comparison, margin borrowing hit 2.73% of GDP in July 2007, during the housing bubble, and 2.81% in March 2000 during the tech bubble, which was followed by a stock market crash.
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Protect Your Retirement with This Stock Market Crash "Insurance"
We buy insurance on our houses, our cars and even on our artwork and jewelry.
But that's not the case with our retirement savings - the money we spend our working lifetimes to amass - the money that will be our sole means of support once we stop working.
With our 401(k)s, IRAs and other socked-away savings, we're content to "let it ride."
That's a reckless and ulcer-inducing investing strategy.
And, as we'll show you in a minute, it's even riskier than most of us realize.
The thing is, it doesn't have to be that way.
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