Investors are once again piling into the stock market with borrowed money at a pace that has historically preceded some of Wall Street's biggest downturns, according to new research, raising concerns that the current bull market may be entering a more vulnerable phase.
Margin debt, the money investors borrow from brokerage firms to purchase stocks using existing investments as collateral, has surged more than 40% over the past 12 months. That rate of growth has only been seen ahead of previous market peaks in 2000, 2007 and 2021, periods that were followed by significant corrections or bear markets, CNBC reported, citing data from Leuthold Group.
