Buying on Margin
- Borrowing money to buy stock in hope that it will go up and you can repay the loan and collect the difference
- Borrow money from bank and take the money to buy stocks
- Stock was seen as something so valuable
- "Spend money to make money"
- People relying on the stock market going up
Summary
Buying on margin allowed people to borrow money from banks or another loaner and buy stocks in hopes of collecting the difference. When the crash happen many suffered because they were buying so many stocks.
Video
Questions?
What would happen if people were not allowed to buy on margin?