While there are signs of froth in the stock market, one classic signal for an equity bubble is conspicuously missing. Margin debt as the percentage of the S&P 500 market cap has climbed since last year, but it’s still nowhere near the average level since the financial crisis.
This suggests that despite persistently low interest rates, investors are’t terribly overleveraged. That’s different from the previous two market peaks in 2000 and 2007, when people and institutions borrowed money to buy stocks at a far faster pace than the stock market’s growth.
This suggests that despite persistently low interest rates, investors are’t terribly overleveraged. That’s different from the previous two market peaks in 2000 and 2007, when people and institutions borrowed money to buy stocks at a far faster pace than the stock market’s growth.