Psychology of Buying on Margin: Is it worth?
Costs of Buying Stocks on Margin
The Pros and Cons of Buying on Margin
Psychology of Buying on Margin: Is it worth?
For the conclusion I would like to say that buying on margin is very dangerous. If you are beginner at investing you shouldn’t even consider this. If you have a lot of experience, you might use it very carefully, but one day it will cost you a lot of nerves and most probable capital too.
The psychology of buying on margin is simple. An investor tries some financial leverage and if gets lucky he makes profits. But usually he’s not satisfied with that and the appetite only grows further. Then he increases financial leverage even more to push up wealth faster. It continues as long as bear market comes, then value of equity starts to shrink so fast that investor is left only with residuals of his former investment portfolio.
I will say it again: buying on margin is extremely risky and it is more speculation than investment. Most probable at the end you will regret of using financial leverage. You can’t earn all the money on the earth. Measured and consistent investment strategy should bring you better results over long term. Do not obey to the hazard!
Read the story of buying on margin on investment book!
