Equity investors are borrowing aggressively to buy stocks in a sign of market exuberance, according to Jim Reid, head of macro and thematic research at Deutsche Bank. Margin debt is measured when an investor borrows cash against the stocks he owns in order to buy more shares. The level of margin debt accumulated on the New York Stock Exchange in May and June was the fifth-largest two-month increase since 1998, Deutsche Bank data showed. The only periods with larger two-month increases were before the 2000 dot-com bubble burst and the 2008 financial crisis, the data said. .SPX YTD mountain S & P 500 year to date “While the current surge doesn’t quite reach the extremes of those prior episodes … and could therefore easily climb further, it still ranks among the most aggressive 12-month rolling increases on record,” Reid said in a note to clients. More ominously, perhaps, “margin debt as a percentage of GDP now exceeds levels seen in both 2000 and 2007,” Deutsche Bank said. The strategist’s warning comes as the broader market rebounded violently from the lows in April when President Donald Trump initially threatened steep tariffs. The S & P 500 has soared more than 30% in less than four months from its low on April 7, reaching consecutive record highs last week. Others have also raised a red flag on the heightened speculative activity on Wall Street, with meme stocks popping up lately. Reddit-obsessed retail traders have targeted stocks such as Opendoor , GoPro and Krispy Kreme , targeting companies with large amounts of short interest and creating short squeezes in the stocks.
Investors are using borrowed money to buy stocks at a pace last seen during market bubbles
Jul 29, 2025
