Margin Buying.

If you have some equity in a brokerage account, you can apply for a margin account. Generally, you can borrow up to 50% of the value of your account to invest. In the 90′s, I signed up for a margin account because everyone I knew was making a bunch of money from tech stocks. It was great for a couple of years and paying interest wasn’t a big deal when the stocks were doing well. Once the dot com bubble popped though, the margin call came in. If the value of your account is not enough to cover your margin position, you have to add more money to your account or else your stock position would be sold. This locks in your loss and drives the market down further. So I learned my lesson and stayed away from the margin account ever since.

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