David Hay — Scary at the margin...
"It looks extremely extended." Margin debt makes a new all-time high even relative to nominal GDP — another reason to book gains and hold cash.
One-line take: Margin debt has looked high for years, but most studies cited the raw dollar total rather than scaling it to a much larger economy. Measured properly — against nominal GDP (which already includes inflation) — it has now made a new all-time high. It could be a "breakout" that keeps running, but it looks extremely extended. Prior margin-debt peaks have closely tracked earlier market tops, and in concert with the other alarm bells Haymaker keeps flagging — de facto insider selling via the trillion-dollar IPOs and increasingly narrow market leadership — it further justifies the letter's standing advice to book gains and hold more cash than usual. (Chart via The Felder Report.)
1. Stocks & names mentioned
None — a pure macro/positioning note on U.S. margin debt as a market-top gauge (margin debt relative to nominal GDP at a new all-time high), with the broader caution about trillion-dollar-IPO insider selling and narrowing leadership. No individual securities, tickers or funds are named; the leverage/valuation-caution view lives in the talking points below and the master macro tables.
2. Talking points
Measure margin debt the right way — against the economy, not in raw dollars
- Margin debt has "looked high for years," but most studies used the total dollar amount outstanding, which keeps growing with a larger economy and so always looks alarming.
- The cleaner gauge scales it to nominal GDP (which already includes inflation) — and on that basis it has just made a new all-time high.
A "breakout" — but an extremely extended one
- One reading is bullish: like a chart breakout, the ratio could keep running to higher highs.
- Haymaker's read is the cautious one — the measure "looks extremely extended." (Chart sourced via The Felder Report.)
Margin-debt peaks have tracked market tops
- Prior peaks in margin debt "have been closely correlated with earlier market tops." On its own perhaps not highly concerning — "though history indicates otherwise."
It's the stack of alarm bells that matters — book gains, hold cash
- Taken with the other signals — enormous de facto insider selling via the various trillion-dollar IPOs and increasingly narrow market leadership — the extended margin-debt reading reinforces the letter's repeated recommendations to be booking gains and holding more cash than usual.
Key points extracted from the Haymaker Substack post (in transcript.txt) for personal study. Not investment advice; this is a paid post and only the text captured for personal study is summarized here. © Haymaker / David Hay for source material.