Margin Loans

Traditionally, margin loans were used by investors to allow them to buy additional shares of stock. Recently, however, many investors have used such loans as a simple way to borrow money for purchases outside their investment portfolio. Even so, they are still subject to margin calls should the value of the securities pledged as collateral fall. See article here, WSJ.

Early Recession Signs

In economics, leading indicators are believed to give a forecast of the direction of the economy. In a recent survey, the CFA Institute asked its members which early warning signs (or leading indicators) they follow. Below are the results:

What is the best empirical early-warning sign of a recession for analysts to follow?

Nonperforming loans	37%
Auto sales	20%
Other	18%
Home sales	17%
Consumer-electronic sales	6%
Convenience store/drugstore sales	2%

Behavioral Biases

The CFA Institute recently conducted a member survey regarding which behavioral biases are most impactful. The results are below:

Which of the following behavioral biases affects investment decision-making the most?

Herding -- being influenced by peers to follow trends	34%
Confirmation -- looking for confirmatory beliefs, overlooking beliefs that disconfirm	20%
Overconfidence -- overestimating skill and accuracy	17%
Availability -- judging outcomes by past experiences of similar outcomes	15%
Loss aversion -- disliking losses more than liking gains	13%
Others -- not in this list	1%