Huge Margin Debt Hangs Over the Stock Market Like the Sword of Damocles
Huge Margin Debt Hangs Over the Stock Market Like the Sword of Damocles. As the chart below shows, investors have racked up huge margin debt in the hopes of increasing performance in a rising market. But that huge debt overhanging the stock market by a thread like the sword of Damocles means greater risk on the downside. That’s because the heavy use of margin, which often occurs at the end of a bull run. This also exacerbates the downturn when investors are forced to sell shares to avoid or satisfy margin calls.