Video game retailer GameStop (a recent stock of interest for internet day traders) surged 51% on Friday and over 83% last week on no news that would remotely justify such a move. That kind of trading action is reminiscent of the height of the dot.com era insanity. Also reminiscent of that time is the current level of margin debt—the amount of money individuals and institutions borrow against their stock holdings in order to buy even more stock. Margin debt spiked by $56 billion in December and $53 billion in November—by far the two largest month-to-month increases on record. Along with spikes in the price of Bitcoin, any electric vehicle maker (or any manufacturers rumored to be thinking about making electric vehicles), and any penny stocks with a similar name to something Elon Musk mentioned in a tweet, now add margin debt as further evidence of a very “frothy” market.
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