Buying on Margin
- Borrowed money to buy stocks
- Hoped the stock will go up and you will be able to repay what you borrowed plus extra
- Bad news if your stock goes down
- Very popular in the years leading up to october 1929 because stocks were increasing
- Most saved money was put in banks (no insurance)
- Hoped the stock will go up and you will be able to repay what you borrowed plus extra
- Bad news if your stock goes down
- Very popular in the years leading up to october 1929 because stocks were increasing
- Most saved money was put in banks (no insurance)
Summary
Realizing the stock market was increasing, Americans bought many stocks with borrowed money in the hopes of making enough money to repay whomever they borrowed from, with some left for them. Most money that was saved was put in banks for safe keeping, although there was no insurance. This was called buying on margin.