Why August Matters: In Markets, In History, and BMG
3 min read
Just like that, August has come and gone. A month that holds a funny place in market history.
Historically, it’s one of the most volatile months of the year: low trading volumes, policymakers on vacation, and unexpected shocks. Think back to 1990 invasion of Kuwait, the 1998 collapse of Long-Term Capital Management, Russia’s default and early tremors of the 2008 financial crisis. August 2011 (U.S. credit downgrade), or August 2015 (China’s surprise currency devaluation).
On August 30, 1929, the Dow Jones set a record high of 380.33 — just weeks before the crash that kicked off the Great Depression. A sobering reminder that confidence can peak right before the fall.
Even in more recent memory, August 30, 2024 closed on a strong note as consumer spending and inflation data pushed markets higher — showing that August can surprise both ways.
Why August is our Tune-up month
At BMG, August is when we touch base with clients to assess their year-to-date performance and strategy. Like homeowners who start to inspect their heating and cooling system to ensure it's ready for the fall and winter, we make it a point to connect.
Summer is wrapping up, and the year still has time left. It’s the perfect checkpoint before other year-end planning.
We use this meeting to ask: Is your portfolio on track? Is your cash working for you? Are your financial goals aligned with today’s realities? It’s not just a mid-year review; it’s about preparing to finish strong and start the next year positioned with confidence.
If you—or anyone you know—could benefit from a fresh perspective on allocations and strategy fit, do not hesitate to get in touch with us at BMG.
The Margin Debt Picture
Take a look above at FINRA graph (margin debt as a % of S&P 500 market cap & debt balances)
As of June 2025, margin debt surpassed $1 trillion, marking an all-time high
In September 2008, leverage peaked at 3.3%, amplifying the pain of the financial crisis.
Today, margin debt sits at 1.8%, about half that level. At first glance, that looks healthier.
This debt level is below the historical average of 2.3% since 1997.
Interest Rate Context
In 2008, average 30-year mortgage rates were around 5.04% . In 2025, average 30-year mortgage rates have fluctuated between 6.7% and 7.2%. Margin loan rates track somewhat higher than these benchmarks
👉 That means even with a smaller share of margin debt in the system, the cost of carrying it is far more punishing today. A headline number of 1.8% doesn’t automatically equal lower risk or bullish sentiment— in fact, the burden could be heavier than it looks, and may amplify the market’s sensitivity to volatility.
Meanwhile, cash is quietly rotating out of large-cap names into mid- and small-caps. That shift can be healthy, but it also thins out the perceived safety net of the market’s biggest stocks — leaving less cushion if volatility spikes.
This isn’t just my observation. Monday’s WSJ Heard on the Street column by Telis Demos raised the same question: Are margin levels sending the wrong signal in today’s higher-rate world? And on the compound and Friends podcast, August 26, took the debate further on their What Are Your Thoughts? podcast — pointing out that misunderstood margin dynamics may be shaping risk more than many investors realize.
Closing Thought
So August is reminding me of two things: markets can turn quickly, and preparation is everything. That’s why we use August to help clients review, recalibrate, and refocus.
Whether it’s margin levels, interest rates, or your own retirement goals, what matters isn’t just where you are — it’s whether you’re positioned to thrive when the environment changes. And a simple way to stress-test that is by asking: how does my portfolio look on a risk-adjusted basis, not just a return basis?
-don’t be surprised if your lowest-beta position ends up being your best performer.
🐢BMG Strategy
