Buying stocks on margin has never been higher than it is right now. Over $1.1 trillion in margin debt is supporting stock prices as we speak. This is an indication of massive risk taking in the stock market. Check out the prior peaks listed here so clearly by Wolf Street in the graph:
1. March 2000: after the margin peak, S&P 500 dropped 50%
2. July 2007: after the peak, we had Bear Stearns in March 2008 and Lehman in September 2008: peak-to-trough S&P 500 -56%
3. May 2018: S&P dropped 20% by late 2018
4. October 2021: S&P dropped 25%
So what are the return implications of this margin debt spike we see in October 2025? That remains to be seen. But looking at this graph, a sobering interpretation would be that there is big risk embedded in the current equity valuations. Buying stocks on margin can lead to big and quick upside gains, but margin debt also can lead to equal-but-opposite accelerated losses as borrowers are forced to exit their positions, accelerating a sell-off.
One other note: 10y UST dropped to a 3-handle today, ending the day at 3.96%. Flight to quality?
Nothing to see here. Move along.