Margin Debt Risk: The Ratios That Mislead Investors
Margin debt just set another record. In May 2026, investors owed their brokers a combined $1.42 trillion, the highest in history and a 53.7% jump from the prior year.1 Every time this number prints a new high, the same charts circulate: margin debt against GDP, against M2, against the total value of the market. They look authoritative. The trouble is that most of them can't measure margin debt risk in any way that helps you manage a portfolio, and the most popular one is the least useful of the bunch. I want to take these apart in order. Why do the three favorite ratios misstate…
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