Stock Market Boom on Clay Legs: Investors Increasingly Buying Shares on Credit

The US stock market is experiencing a boom, but underlying indicators suggest it may be built on shaky foundations. A growing number of investors are purchasing stocks using borrowed money, a practice known as buying on margin. This trend, alongside other metrics, points towards a potential irrational exuberance that could precede a sharp correction.

While the market has seen significant gains, the increasing reliance on leverage by investors raises concerns about its sustainability. The article suggests that this speculative behavior, coupled with other signals, is increasing the probability of a substantial and prolonged downward trend.

This situation is compared to a "boom on legs of clay," implying fragility despite outward appearances of strength. The potential for a long-term downward movement in the market is growing closer, urging caution among investors who have been drawn into the current rally.