> The stock market's record-high margin debt is keeping Wall Street pros up at night

It may not be long before the whole US stock market has a Situational Awareness moment.

At least, that's the worst-case scenario being mulled by some analysts on Wall Street, who have increasingly turned their attention to one eye-popping statistic in the market: Margin debt held by investors has swelled to records and grown at a pace recently that's only been seen leading up to major corrections.

The fear is that a steep tech sell-off could be the spark that causes the record amount of borrowed cash to combust, triggering margin calls and resulting in a wave of forced selling that derails the bull market.

It may sound like an unlikely scenario, but it's a growing risk investors need to contend with, especially considering how concentrated the market is in tech and how exposed US households are to a sudden drop in equity prices, investing pros told Business Insider.

Investors who trade on margin can buy stocks or purchase investment products by borrowing funds from a broker. But if the value of their positions falls below a certain threshold, investors get hit with a margin call, demanding they deposit more money into their margin accounts. If they can't, brokers can sell their positions, sometimes at a loss to the investor.

It's what caused South Korea's stock market to tank this summer. Retail investors in the nation were highly levered and hit with a wave of margin calls when chip and memory stocks began to drop this summer, triggering a spiral of forced selling.

The same dynamic also led to the implosion of Situational Awareness, the highly levered hedge fund run by AI wizkid Leopold Aschenbrenner that bet heavily on chip stocks before being hit with margin calls this summer.

Debit balances in customers' securities margin accounts hit a record $1.5 trillion in June, according to FINRA data.

https://www.businessinsider.com/stock-m … gh-2026-10