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posted on 05 January 2018

Investors Are All In

Written by , Clarity Financial

As I noted this past weekend, 2017 was a year for the record books. Not surprisingly, the strong advance fostered a surge in investor optimism which pushed allocations to equities to the second highest level on record.

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And leveraged to boot.

Importantly, don't mistake record margin debt levels as people borrowing against their portfolio just to make larger investment bets. In reality, they are using leverage to support their lifestyle as well, after all, as long as stocks keep rising it's like "free money." Right?

This is shown in both the level of debt used to support the standard of living and the relationship between real, inflation-adjusted, margin debt and economic growth.

Yes. Investors are optimistic.

The current level of exuberance, and the willingness by individuals to shun risk for the hopes of chasing wealth brought to mind Bob Farrell's 10-Investment Rules.

Particularly "Rule #9."

I have penned these previously, but these rules should be a staple for any investor who has put their hard earned "savings" at risk in the market. These rules, which are rarely heeded in the heat of bull market, are worth revisiting as we enter into 2018.

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