Content Editor, Dunham | 2025 ThinkAdvisor Luminary Award Winner | 2026 Wealthies Finalist — Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
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The IPO Wave Is Coming — Should Investors Be Worried?
A wave of mega-IPOs is about to add hundreds of billions in new equity supply to a market that's already expensive.
The last three times net equity supply went positive was 2000, 2009, 2020 – all brutal periods for markets.
When that much new equity hits the market at once, the money to buy it must come from somewhere - and that somewhere is usually other assets many already own. New issuance also expands the supply of shares floating around, and when supply expands that fast – prices can fall.
The Deep Dive:
Everyone wants to know “which mega-IPO do I want in?”
But the better question might be “what does this much new supply do to the rest of the market?”
Over the last ~30 years, the bull market has been supported by two structural tailwinds.
Net equity supply is simply the difference between new shares being added to the market and shares being removed through buybacks. When it's negative, there are fewer shares in circulation than before (buybacks > shares issued = prices drift up). And it’s the opposite when positive (shares issued > buybacks = prices drift down)
Second - the U.S. money supply keeps expanding. More dollars chasing finite assets gives prices a natural boost.
Net equity supply briefly went positive around 2000, again in 2008-09, and during COVID in 2020. All brutal periods. But the reason issuance spiked wasn't the same each time.
Sometimes it's greed - companies diluting into strength when valuations are stretched and the window is open. Or sometimes it's desperation - firms flooding the market with dilutive shares just to stay pay bills.
Either way, more net-shares flooded the market which pushed prices down.
With that in mind, the current setup should raise eyebrows. . .
As of Q4 2025, we're tracking back toward positive territory- and the biggest mega-IPOs haven't even hit yet.
As you may have read, several of the world's most valuable private companies are preparing to go public simultaneously, collectively targeting raises that could top ~$200 billion via IPOs - with total equity issuance projected at $675 billion (a record).
That's a massive amount of capital being soaked up into new shares in a short period of time.
But here's the thing - when money floods into IPOs, it can act like a suction pump. Why? Because to absorb this wave of new equity, funds and investors need to free up cash - and they rarely sell their best positions to do it. The weakest/marginal holdings get cut first.
And that forced selling can amplify losses throughout the rest of the market and thin out liquidity.
This is why buybacks act as the counterweight. And with Wall Street projecting over $1 trillion in repurchases this year, buybacks could still outpace new issuance - supporting prices.
But announced buybacks aren't actual buybacks. It's just talk. And with free cash flows getting squeezed by massive AI capex spending4, executing those repurchases gets harder by the quarter.
The point is - we’re dealing with late-cycle sentiment, expensive valuations, increasingly cash-constrained firms, and record issuance.
Alone, none of those is fatal.
But all four together? That’s worrying.
Hopefully those buybacks materialize.
Figure 1: Simon White, 2026
The American Consumer Is Running Out of Road as Real Wages Plunge
Real wages just turned negative again - inflation is outpacing paychecks for the second straight month and for the first time since 2023.
Household debt just hit a record $18.8 trillion, delinquencies are at their highest since 2017, and excess savings are gone.
What you need to know:
Real average hourly earnings fell 0.7% year-over-year5 through May 2026 - meaning wages aren’t keeping up with inflation.
Why it matters:
A consumer whose wages can't keep up with prices has two choices - borrow more to keep up buying or spend less. With debt already at record levels and delinquencies climbing, the first option is increasingly unlikely.
The Deep Dive:
First, let's clarify what negative real wages actually mean.
Say you got a 3% raise this year. Feels good, right? But if inflation ran at 4%, you actually lost 1% of purchasing power. So your gross paycheck is bigger. But it buys less. That's negative real wage growth - and it's happening right now.
Wages grew 3.4% year-over-year through May 2026. Yet Inflation ran at 4.2%. That's an annual gap of -0.8% - the widest negative spread since 2023.
Sure, that's a relatively small gap - but it compounds. And it comes on top of a stretch where real wages are still down 1.2% compared to January 20216.
Thus, American workers have been treading water for five years. And with inflation picking back up, the water is rising.
Normally, households dip into savings to keep spending. But that cushion is gone. Americans burned through their excess savings after COVID. There's no buffer left.
The only options are to cut back spending or take on more debt.
Delinquency rates on household debt hit 4.8% - the highest since 2017. Serious credit card delinquencies are nearing levels last seen in 2010. Subprime auto loan delinquencies just hit a 32-year record at 6.9%. And 10.3% of all student loan balances are now 90 or more days past due.
Put simply, they're piling on debt at a time when servicing that debt is becoming unbearable.
You can paper that gap over with cheap credit for a while. And Americans did.
But you can't run an engine on debt forever.
At some point, the engine needs more oil.
Figure 2: Bloomberg, June 2026
Margin Debt Is Surging — And the History Isn't Pretty
Margin debt just hit a record $1.3 trillion - growing at 53.3% year-over-year, a pace that has only been seen six times in 70 years of data, with five of those episodes preceding bear markets.
The same leverage pushing prices higher today can become forced selling tomorrow — and when margin calls fire across the market all at once, losses don't add up, they multiply.
What you need to know:
Margin debt surged to a record $1.3 trillion10in April 2026 - up 53.3% year-over-year - a rate of growth that has only been exceeded six times since 1960, with five of those episodes preceding bear markets.
Why this matters:
Margin debt amplifies everything - gains on the way up, and losses on the way down. The faster it grows, the more fragile the market becomes, even without an outside shock to trigger the unwind.
The Deep Dive:
Say an investor puts up $50,000 of their own cash and borrows $50,000 from their broker - giving them $100,000 in total buying power at the standard 2:1 margin ratio. The stock goes up 10%. Their position is now worth $110,000. After paying back the $50,000 loan, they pocket $60,000 - making a 20% return on a 10% move.
This is why investors use leverage – it can amplify returns.
Meanwhile, more margin drives more buying, higher prices, and more confidence to borrow again. It's a self-reinforcing loop.
That is, until it swings the other way. . .
A 10% drop leaves $90,000 on the table. And after repaying the loan, only $40,000 remains. Now, a 10% market drop just became a 20% loss on their money.
Worse, when things turn sour, brokers hit you with a margin call - essentially a letter saying "your losses are too big, put up more cash or we start selling your positions to cover the debt." So you don't get to wait for the market to recover.
And every other leveraged investor often gets the same call at the same time.
Thus, forced sellers can flood the market all at once – pushing prices lower – and setting off more margin calls - creating a feedback loop down.
That’s why this recent data worries me.
The year-over-year rate of change in U.S. margin debt - not the total, but the paceof growth – in April 2026 sits at 53.3%, just below the "55% euphoria threshold."
To put this into perspective, in ~70 years of data, only six prior episodes exceeded this level. Five bear markets preceded (the lone exception was 1983).
So, at ~$1.3 trillion of total margin debt and growing at >50% year-over-year11, things look like they’re deep in historically speculative territory.
It’s worth noting that not all margin debt is pure speculation. Short sellers also require margin accounts, meaning some of that $1.3 trillion could reflect investors hedging against a downturn rather than betting on one. That's a legitimate counterpoint. But at 53% annual growth, hedging alone doesn't explain the surge.
So, don’t be surprised if market swings become more volatile.
Because margin always acts like gasoline on a fire.
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information. This document is provided for information purposes only and should not be considered as investment advice.
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