I buy and sell stocks and bonds on a small scale, and I’m usually pretty good at it. Stress junkie that I am, however, I had to find ways to trade that let me sleep at night, avoid ulcers, and not become more of an asshole than I already am. So I came up with a few simple rules to follow.
What little I’ve learned that might be useful to others, I’ll be presenting every day or two this week here at VodkaPundit.
Today’s Tip: Never Buy on Margin.
Margins are a way to play the markets using other people’s money. Sounds fun, doesn’t it? You put up, say, $2,000, and your broker loans you another $8,000 to buy stuff with. That’s how those “learn how a one thousand dollar investment can let you control five thousand dollars of incredibly common gold coins” ads work.
When you borrow money to make money, you’re betting that you can figure out how to get a better return than your broker can. The money you make on your wise investment choices will pay off the loan and still leave you with a tidy profit. Oftentimes, maybe you can do just that. But the money will have to be repaid eventually