A parabolic rise in outstanding margin debt, which hit an all-time high of $1.502 trillion in June 2026, has historically preceded steep market declines. The S&P 500, Dow Jones, and Nasdaq Composite have posted above-average returns under President Trump, but the margin-debt pattern raises the odds of a correction in year six of his term.
Outstanding margin debt reached an all-time high of $1.502 trillion in June 2026, and that surge has a track record of foreshadowing trouble for stocks. Margin is money investors borrow from their broker to buy or short securities, and using it amplifies both gains and losses.
Margin debt jumped 77% in fourteen months
Between April 2025 and June 2026, outstanding margin debt rocketed higher by 77%. It retraced to $1.417 trillion in July before climbing back to $1.454 trillion in August, according to FINRA. Over the last three decades, margin debt has surged at least 65% over a short span on four occasions, and each prior instance preceded a major downturn.
In the twelve months before the dot-com bubble burst, margin debt surged 80% to nearly $300 billion; the S&P 500 and Nasdaq Composite then lost 49% and 78% of their respective values. Ahead of the 2007-2008 financial crisis, margin debt catapulted 66% over 13 months, and the S&P 500 subsequently shed 57% of its value. Fiscal stimulus during the pandemic sent margin debt higher by 95% over 19 months, and the 2022 bear market followed within three months.
Bull market returns have outpaced most presidencies
Wall Street's benchmark indexes have risen under most presidents, but the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have posted considerably higher average annual returns under Trump than under almost all presidents since the late 1890s. The Tax Cuts and Jobs Act, signed into law in December 2017, permanently lowered the peak marginal corporate income tax rate from 35% to 21%, which let businesses retain more income and contributed to record S&P 500 share buybacks in 2025.
Even so, the parabolic climb in margin debt suggests a heightened likelihood of a crash in year six of Trump's presidency. History shows downturns tend to be short-lived: Bespoke Investment Group found that the typical S&P 500 bear market resolves in 286 calendar days. By comparison, the average S&P 500 bull market has lasted 1,023 calendar days.
Source: The Motley Fool
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