A 30% move upward since last August, to a new record high. Yet no one is celebrating it. That, despite the fact that it is widely owned by many investors across the wealth spectrum. Does that sound strange?
Well, maybe not when you consider it is not a stock, nor an exchange-traded fund (ETF). It's not even a bond. It’s margin debt. As tracked monthly by the Financial Industry Regulatory Authority (FINRA), the securities regulator. And it has reached the point where in other cycles, this was the time to take notice — before it ends up being one of those economic figures you wish you had known sooner.
It's Time To Pay Attention to Margin Debt
That’s the nature of negative statistics, isn’t it? How much do we hear about margin debt as opposed to who will run the Fed? Or what the POTUS is saying on social media?
Yet U.S. margin debt has been quietly etched into the financial history books, surging past $1.2 trillion in the latest monthly report. While the S&P 500 Index ($SPX) continues to flirt with all-time highs, the amount of money investors are borrowing from brokers to fund those purchases has reached its most extreme level since the 2021 tech peak and the 2007 pre-crisis era.
The FINRA website publishes monthly statistics. If you view them, you will see that margin debt has been on a steady climb for a while. And that concerns me. Or, to clarify, as a risk manager, it makes me more aware of just how vulnerable the stock market’s perch is right now.
To the casual observer, record margin debt looks like a sign of extreme confidence. To a risk manager, it looks like a hidden fuse that could turn a routine market pullback into a violent, self-reinforcing liquidation. We might have seen the start of that in recent days. Regardless, the warning signs are there and should be heeded.
The Warning Signs To Know
Heeding the warning signs doesn’t have to mean selling securities. But it does mean managing and understanding how much exogenous risk exists, given the overhang of things like margin debt. And this article is isolating that form of borrowing. Don’t get me started on credit card debt and other consumer leverage! Like so many things on Wall Street, it's not a problem. Until it is. And by then, it's too late. Unless you account for its presence in advance.
The most alarming trend in early 2026 isn't just the level of debt, but the speed at which it is growing. Margin debt is currently expanding more than twice as fast as the underlying stock market. History shows that when leverage grows significantly faster than market value, the system becomes fragile. This exact pattern preceded the crashes of 1929, 2000, and 2008. When investors are all-in on borrowed money, they have no dry powder left to buy the dip, and any small decline can force them to sell.
When you subtract margin debt from the cash held in investor accounts, you get the credit balance. Currently, this sits at a record-breaking -$814 billion. This means that, collectively, U.S. investors owe nearly a trillion dollars more than they have in cash. This leveraged long position is the textbook definition of excessive risk-taking. It suggests the market is literally running on borrowed time.
Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. His weekly investor letter can be accessed at ETFYourself.com. To copy-trade Rob’s portfolios, check out the new PiTrade app. And, for a change of pace, his new blog on racehorse ownership as an alternative asset is at HorseClaiming.com.
On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
