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Debt in Stock Market Surpasses Internet Bubble. Is This a Warning Sign?

This video article features Facebook, TripAdvisor, LinkedIn, and Tesla.

The New York Stock Exchange recently updated its stock market margin debt data, and Main Street and Wall Street are both continuing to dump billions in borrowed dollars into the stock market. Borrowed money in the stock market, known as margin debt, hit an all time high of $401.2 billion in September. This puts margin debt, adjusted for inflation, 10% below levels seen during the housing bubble and above highs set during the dot-com bubble. 

*Data from NYSE; inflation adjusted at rate of 2.4%.

History shows us that this is typical market behavior when you have big-name companies such as LinkedIn (NYSE: LNKD  ) , TripAdvisor (NASDAQ: TRIP  ) , Facebook (NASDAQ: FB  ) , and Tesla Motors all rising more than 100% in a year, and the S&P 500 also hitting all-time highs. 

TSLA Chart
TSLA data by YCharts.

In the following video, Motley Fool analyst Blake Bos goes over the margin debt data, gives examples of how margin debt works in the market, covers valuations behind the four high-flying stocks mentioned here, and explains how he uses this troublesome data. 

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Related Tickers

9/26/2016 4:00 PM
FB $127.31 Down -0.65 -0.51%
Facebook CAPS Rating: ***
LNKD $193.04 Up +0.25 +0.13%
LinkedIn CAPS Rating: ***
TRIP $61.89 Up +0.02 +0.03%
TripAdvisor CAPS Rating: *****