Is the casino about to go bust?

Most of our retirement and savings portfolios are in equities. While we have been investors for over 40 years, we don’t gamble with stocks or tried to time the market. We’ve never borrowed to buy stocks.

If you’re a stock market gambler, now might be a good time to fold ‘em.

“Margin debt went from $850.6 billion in April 2025 to $1.502 trillion in June 2026. That is 77% in 14 months. In the 30-year history of this data, that kind of move has happened three other times. All three were immediately followed by significant stock market declines. April 2025 is worth noting as a starting point. Stocks sold off sharply that month during the tariff uncertainty. Investors pulled back on borrowing. Then markets recovered. The AI rally picked back up. Investors started borrowing again, and kept borrowing all the way through June 2026 without stopping.

“Retail investors borrowing through brokerage accounts are one piece of the leverage picture. Hedge fund gross borrowing hit $7.2 trillion in July 2026, with gross leverage approaching a 10x multiple, Seeking Alpha reported. Leveraged ETFs, which use borrowed money to amplify market returns, have more than doubled in assets over the past year. The FINRA margin debt record is the easiest number to track. The full extent of leverage in the system is larger.”

What does recent history teach us about such debt surges?

“Between March 1999 and March 2000, outstanding margin debt soared 80%. The dot-com bubble then burst. The S&P 500 lost nearly half its value. The Nasdaq Composite fell by more than three-quarters. Between June 2006 and July 2007, margin debt grew by 66%. The financial crisis followed. The S&P 500 lost more than half its value before bottoming in March 2009. Between March 2020 and October 2021, margin debt jumped 95%. The 2022 bear market followed. The Dow Jones Industrial Average fell roughly a fifth. The S&P 500 lost about a quarter of its value. The Nasdaq dropped by about a third.”

Buckle up, peeps.

 

https://www.miamiherald.com/news/business/article317259136.html?utm_source=mcc&utm_medium=facebook&utm_campaign=kw-auto&cid=cmt_aud_pdsoc-fb_mcc-kw-auto_2026&kwp_0=2664729&kwp_4=7266224&kwp_1=3073406&utm_id=120251411807840531&utm_content=120251411808330531&utm_term=120251411808040531&fbclid=IwY2xjawUaEKpwZG9mAWV4dG4DYWVtATAAYWRpZAGrOAWcpK9Tc3J0YwZhcHBfaWQQMjIyMDM5MTc4ODIwMDg5MgABHuj4lNKZnG3e_wqBG13Eb9VxUMNxnzs-h1ySPb-tRHGnjGg8akvZ48tgDPKy_aem_Eqmi6YXwipCs6omAAW85VA

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