Buying on the Margin
· Borrowing money to buy stock in the hope that it will go up and you can repay the loan and collect the difference
In the 1920s you could buy stocks on margin. You could put 10 percent down and borrow the rest against your stocks.
- Ron Chernow
- Ron Chernow
Subjunctive Question
What would the stock market crash been like if people and banks did not invest money they didn't have to invest?
FUN FACT: Only a 10% down payment was needed to buy stocks.
Summary
Buying on the margin was a strategy of investing in stocks using loaned money in the hopes that you would earn it back.