That is the picture emerging from the latest data on margin debt - the money investors borrow from their brokers to buy more stocks than they could afford with cash alone. That number just crossed a threshold that looks a lot like what happened before the market tops of 2000, 2007, and 2021.
Leuthold Group wrote: "Today's 54% absolute margin debt growth, and 26% excess margin debt growth over the last 12 months both exceed the historical trigger points in our study."
Opsal's bottom line? "This is very bearish looking."
Here is the part that makes the math uncomfortable.
The S&P 500 has had a great year, returning 22% including dividends. That is a solid number by any measure. But margin debt grew more than twice as fast. When borrowing races ahead of actual market gains by that much, it usually means investors are getting overconfident.
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That is a lot of borrowed money sitting in the stock market right now.
"When people get too enthusiastic, too tolerant of risk, too greedy, things usually roll the other direction," Opsal said.
A good sign of that enthusiasm? Speculative leveraged ETFs-funds that use borrowed money themselves to amplify returns-saw their assets nearly double in just two months last spring.
It is not just that investors are borrowing a lot. It is where that borrowed money is going.
A huge chunk of the buying has been concentrated in AI and data-center stocks. Think of the companies building the physical infrastructure for the artificial intelligence boom. Those stocks have been the darlings of this market, and investors have been piling in with borrowed cash.
"Once a data center buildout stock starts to crack, that could force others to crack, and then the margin calls will hit that whole silo of investors," Opsal warned.
Margin calls are what happen when a stock falls and your broker demands more cash to cover the loan. If you cannot pay, they sell your positions-often at the worst possible time. When that happens to a lot of people at once, it can turn a small drop into a cascade.
"The concentration of gains and the concentration of buying power is part of the story," Opsal said.
History is not a guarantee, but it is worth paying attention to.
When margin debt has hit these levels in the past, the S&P 500's returns over the following year have tended to basically disappear. The risk works in two directions. If borrowing slows down, demand for stocks slows with it. And if prices start to fall, margin calls could force investors to sell, making the drop worse-especially in those hot AI and data-center names where so much borrowed money is parked.
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