Is the Trump Bull Market About to Crash? A Historically Accurate Measure of Risk Offers a Chilling Answer.

The stock market has a $1.5 trillion problem that can’t be swept under the rug

https://www.fool.com/investing/2026/09/26/is-trump-bull-market-about-to-crash-historically-accurate-measure-of-risk-chilling-answer/

Wall Street's oft-overlooked measure of risk is sending an unmistakable warning to investors

Though several risks to the Trump bull market have been highlighted in recent weeks, including the potential for an AI bubble-bursting event and historically high stock valuations, arguably no red flag looms larger than outstanding margin debt.

But things may not be as perfect as the Dow, S&P 500, and Nasdaq make them appear. According to one stock market measure, which has flawlessly forecast short-term directional moves in Wall Street's major stock indexes over the last three decades, the likelihood of a Trump bull market crash is climbing.

Margin represents the money an investor borrows from their broker, with interest, to short-sell (wager against) or purchase securities. If margin is used to buy a stock or an exchange-traded fund (ETF), it acts as a form of leverage.

Using borrowed capital to lever your investments is risky business. If a security moves in the desired direction, you can amplify your gains, even with the interest owed to your broker. But if a security moves opposite to what you expect, margin can magnify your losses. This makes outstanding margin debt a crude but effective measure of investors' willingness to take risks.

Over the long run, we'd expect to see margin debt climb more or less in lockstep with Wall Street's major indexes. But when outstanding margin debt skyrockets over a short period, it's signaled forthcoming disaster for the stock market, without fail, over the last three decades.

Total Margin Debt hits $1.5 Trillion, a new all-time high

According to FINRA, outstanding margin debt surged from nearly $851 billion in April 2025 to an all-time high of $1.502 trillion in June 2026, equating to a 77% increase in 14 months. It's only the fourth time we've witnessed margin debt jump by at least 65% over a short period:

• March 1999 to March 2000: The first significant surge in margin debt occurred during the internet boom and ended when the dot-com bubble burst. Over 12 months, margin debt leaped 80% to nearly $300 billion. Over the following two years, the S&P 500 and Nasdaq Composite lost 49% and 78% of their respective values.
• June 2006 to July 2007: Outstanding margin debt also peaked right as the financial crisis was taking shape. The roughly $416 billion in margin debt reached in July 2007 marked a 66% increase from where aggregate investor borrowing stood in June 2006. The broad-based S&P 500 plummeted 57% during the Great Recession.
• March 2020 to October 2021: Fiscal stimulus checks during the pandemic kicked investors' willingness to take risks into overdrive. Over a 19-month stretch ending in October 2021, margin debt tipped the scales at $936 billion, up 95% from the COVID-19 pandemic low. Just three months after margin debt peaked, the 2022 bear market commenced.
• April 2025 to June 2026: As noted, margin debt soared 77% in 14 months to a record high.