Margin Loans: A Hard Look At The Market's `Easy Money'Pam Black
In a roaring bull market, shrewd investors keep buying stocks even if they have to borrow. So it's not surprising that in the past five years, as the Standard & Poor's 500-stock index has risen 76.3%, margin debt, created when investors borrow against the value of their stock, has grown 34.4%. Borrowing on margin is cheap, easy, and often tax-deductible. But don't get seduced by this quick source of cash: Today's Big Board bounty may not last much longer. "In an up market, with 50% margin, you can make twice as much," says Laurence Foster, a KPMG Peat Marwick planner. "But in down markets, you get what we technically call trouble."
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