Margin Debt Sees Further Rise in January

Margin debt continues to rise, in shades of 1987.

The amount borrowed from New York Stock Exchange member firms to buy stocks jumped 6.6% in January to $243.5 billion, the Big Board said Monday.

That debt equals about 1.4% of the market value of U.S. public companies, the highest ever under the current rules, which date to 1974, said Charles Biderman, president of investment research firm TrimTabs.com.

The statistics suggest that the surge in many U.S. computer-related and telecommunications stocks is increasingly being fueled by borrowed money.

Federal Reserve Chairman Alan Greenspan said at his confirmation hearing last month that he was worried by the rise in margin debt in the last two months of 1999. Margin debt climbed an even steeper 13% in November and 11% in December.

The previous high in margin debt as a percentage of market value occurred in September 1987--a month before the crash that sent the Dow Jones industrial average down 23% in one day.