Buying on Margin
- Borrowing money in order to buy stock in the hope that it will go up and you can repay the loan and collect the difference
- Before the Black Tuesday, many people wanted to invest in the stock market because it was easy to make money out of nothing
- Many people were very wealthy because they were able to buy on margin
- In order to profit, you had to make more money than you originally invested along with the banks interest rate
- After the stock market crashed, people were unable to pay the banks back and many committed suicide
- Banks went bankrupt and had to close
- Because banks closed down, people who had savings lost them