Yes, people have lost a lot of wealth this way in market downturns.
It’s greatly ironic: in the interest of avoiding minor taxes, they lose major assets to their bankers. It wouldn’t surprise me if the same bankers who profit in the downturn from the margin calls are the ones who sold their clients on the strategy.
Any time you go into debt you need to make sure you have a margin of safety. It’s an instrument of some value but it’s a sharp blade to be wielded carefully.
It’s greatly ironic: in the interest of avoiding minor taxes, they lose major assets to their bankers. It wouldn’t surprise me if the same bankers who profit in the downturn from the margin calls are the ones who sold their clients on the strategy.
Any time you go into debt you need to make sure you have a margin of safety. It’s an instrument of some value but it’s a sharp blade to be wielded carefully.