Anonymous
Anonymous asked in Business & FinanceInvesting · 1 month ago

Is trading stocks on margin always a bad idea or are there any success stories out there?

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  • cosmo
    Lv 7
    1 month ago
    Favorite Answer

    Sure, there are plenty of stories out there.  Buying stocks on margin is a form of gambling that you can actually win, especially if you're good at it (and get good advice).  It is possible to lose, and lose big --- lose more than all you have.  Of course if you're young and can tolerate a personal bankruptcy, that's not too bad.

    Consider that the major private Universities like Stanford, Yale, and MIT have intelligent, sophisticated management staffs that invest their endowments, and they all use margin in an attempt to beat the market.  In recent years, all of them have done worse than the market --- all of them have done worse than simply buying, say, QQQ or SPY and holding it.  A lot of time and effort and margin, all resulting in an outcome worse than buying and holding.

    If you had the guts and the insight to buy stocks on margin back in March 2009, at the beginning of the Obama Administration, you made out great.

    But lots of people want to pile into the stock market now, just as we're (probably?) heading into a Depression, the likes of which we have not seen since the 1930s.  I am using margin to sell stocks short.

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  • 1 month ago

    It's always a bad idea if you don't know what you're doing.  

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