This time, the popping of the housing bubble was the catalyst that caused the market meltdown. This triggered the freeze of the entire global financial system, which exacerbated the stock market crash. The top-to-bottom crash in the S&P 500, from the peak in October 2007 to the bottom in March 2009, was almost 57%. Soaring margin debt was a warning sign of impending market turmoil. Don't Stick Your Head in the Sand The last two spikes in margin debt in 2000 and 2007 both happened right before the entire S&P 500 was cut in half. Yet, against the increase in margin debt that has happened over the past 12 months, those increases in 2000 and 2007 look pretty tame. That has to be considered a flashing warning sign. We could soon be in store for another unpleasant stock market experience. Now, to be clear, I'm not saying that a major stock market decline is certain to happen. I'll never claim to be certain of such things. But to look at this chart against what has happened historically when margin debt spikes and then pretend there isn't a good chance trouble is brewing would be silly. Plus, soaring margin debt isn't the only canary in the coal mine... I recently wrote to you about how one of the smartest investing shops that I know currently has the lowest exposure to U.S. stocks in the three-decade history of the firm. I also detailed three other major warning signs that suggest a market correction could be coming. I find it a bit unusual that we are barely a year removed from a severe market sell-off and another one could be approaching. But then again, the astounding recovery of the stock market over the past 12 months was also very unusual. If I'm right and the market does suddenly roll over, it isn't anything to fear. For long-term investors who are still actively buying stocks, a big sell-off is good news because it allows them to purchase companies at better valuations. And always remember that even the worst market crashes are minor bumps in the long-term upward journey of the stock market. For people who have money invested that they are going to need in the near future, though, I think now is a great time to consider taking some profits. There is clearly more than enough smoke to suggest a major market event could be coming, and you don't want to risk being forced to cash out during a panic. If you have cash in the market that you are going to need in the next 18 months, I wouldn't expose it to what could be coming. Good investing, Jody P.S. There are a few rules for riding out a bear market... Don't invest funds you need in the near term, stick to your stops (but don't panic-sell), make a wish list of stocks to buy when the market tanks and diversify... If you're ready to learn how to diversify into digital currency (but want to do it more safely than chasing after the next big coin), take a look at Marc's latest presentation. He's found a stock that offers exposure to 36-plus crypto opportunities. | 
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