Investors Big and Small Are Driving Stock Gains With Borrowed Money
***The past year’s rally has been boosted by Robinhood day traders and big investment firms
Investors are borrowing huge sums of money to buy stocks. Is that a problem?
The “everything rally” that started in stocks last year has been boosted by investors betting money they have borrowed. That includes both small players like the day traders on Robinhood Markets Inc. and heavyweights like Archegos Capital Management, the investing firm that triggered a mini meltdown for several companies’ stocks.
As of late February, investors had borrowed a record $814 billion against their portfolios, according to data from the Financial Industry Regulatory Authority, Wall Street’s self-regulatory arm. That was up 49% from one year earlier, the fastest annual increase since 2007, during the frothy period before the 2008 financial crisis. Before that, the last time investor borrowings had grown so rapidly was during the dot-com bubble in 1999.***
House of card??? Imminent crash coming? Maybe in 24 months after borrowed dry powder run out?