Investors Zeal to Buy Stocks With Debt Leaves Markets Vulnerable

Investors borrowing record sums to bet on stocks exacerbated this month’s selloff, after they were hit with calls to reduce those obligations and forced to sell shares to raise cash.

If that debt, known as margin loans, continues to rise at the current pace, analysts warn that big selloffs and sudden bouts of volatility in the stock market could become more commonplace.

Retail and institutional investors have borrowed a record $642.8 billion against their portfolios, according to the Financial Industry Regulatory Authority, as they try to pocket bigger gains by ramping up their exposure to stocks.

But they were left vulnerable when the Dow rapidly tumbled more than 1,000 points during two separate sessions earlier this month. Money managers say the penalties these investors faced from their brokers for trading on margin helped deepen the rout.

More..

https://www.wsj.com/articles/investors-zeal-to-buy-stocks-with-debt-leaves-markets-vulnerable-1519560001

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I thought the margin calls were behind the 1929 collapse, And that they were regulated somewhat. Of course, Whiny Donny and his pals have been busy eliminating many regulations... without anyone noticing..