By James Saft
(Reuters) – Alan Greenspan says stocks are heading higher. Margin debt is at an all-time nominal high with investors borrowing another 5 percent against their brokerage accounts last month alone.
Do the math.
In this case one discredited former Fed chief plus legions of leveraged investors might just equal a coming correction.
First, there is Greenspan, who has come back with a new book telling us that it didn’t happen, wasn’t his fault and anyway he predicted it all at the time.
His crystal ball, unsurprisingly, says “buy”, a sell sign if ever there was one.
“In a sense, we are actually at relatively low stock prices,” Greenspan told Bloomberg Television on Wednesday. “Indeed I say that so-called equity premiums are still at a very high level, and that means that the momentum of the market is still ultimately up.”