The stock market’s mood can change on the dime. And when things get really out of whack, it’s up to the prudent advisor to notice it before it whacks client portfolios.
Case in point: Excessive leverage in the equity market. Margin debt on the NYSE rose for six consecutive months and hit a record high of $444.93 billion in Dec. 2013. Margin debt represents the amount of money owed by customers to their broker for borrowing money to purchase securities. After posting five consecutive yearly gains, the memory of stock market losses is old.