Buying on the Margin
- 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.
- Theory of using borrowed money to buy stock
- Terms to pay back
- Had to make more than 10% to make money
- If stock went down you can’t pay original stock.
- No regulations
- Banks make guaranteed money
- "Spend money to make money"
Summary: The stock market was increasing therefore Americans bought many stocks with borrowed money hoping to make a profit. They had to pay back the banks and then the left over they made was for themselves. Most money that was saved was put in banks for safe keeping though there was no insurance. This is called buying on a margin.