Buying on Margin
Notes
-Borrowing money to buy stock in the hope that it will go up
-You can repay the loan and collect the difference
-Led to stock market crash
-Borrowing money to buy stock in the hope that it will go up
-You can repay the loan and collect the difference
-Led to stock market crash
Quote: "In the 1920s you could buy stocks on margin. You could put 10 percent down and borrow the rest against your stocks." - Ron Chernow
Political Cartoon
BIG Question; What would of happened if banks did not give out so many loans?
Summary
Buying on Margin meant that you did not have to have the money to purchase stocks, you could invest. Many banks would loan out money and people would buy on margin which then lead to the stock market crash.
Buying on Margin meant that you did not have to have the money to purchase stocks, you could invest. Many banks would loan out money and people would buy on margin which then lead to the stock market crash.