Suze Orman
👤 SpeakerAppearances Over Time
Podcast Appearances
Not bad.
But what you did instead is you bought 2,000 shares because they gave you the 10,000 to do so.
So 2,000 shares at 15 is $30,000.
You sell, you pay back the broker 10,000.
Now you have
$20,000.
Rather than making just $5,000 on your money, you now made $10,000 on a $10,000 really
investment of your own money, which is almost 100% return on your money after, of course, you've paid interest on the $10,000 that you borrowed.
That's why people do margin, however.
Stocks just don't go up.
Have we not seen what happened to the stock market and what's gone up and down and all over the place and really obliterated in many areas?
Let's say it doesn't go up.
It goes from 10 to five.
Let's say that's true.
If you had a thousand shares and now you sold at five, you'd have $5,000.
You lost half of your money.
Okay.
However, if you borrow $10,000 and now what happens is you have 2,000 shares and it goes to five,
Now what do you have?
You have $10,000 that you sold, but guess what?