I'm not totally sure I got this completely right, but here's what I getfor S&P500 monthly for the past 25 years, Jan-1985 thru Dec-2010.Initial investment $10,000 on Jan 31, 1985, ignoring dividends, taxes, fees, and commissions. No additional money put in, no money taken out.No margin:Final value: $70,013 (That's about 8.1% CAGR w/o dividends, so it passes the smell test.)Highest value: $86,254Initial margin: 25% ($2500), rate 5% (we should be so lucky!). Margin interest allowed to accumulate and compound.Final value: $78,405Highest value: $100,171Total margin interest: $6610The value is the stock value (started out at $12,500) minus the current margin amount (which is $2500 plus the total accumulated margin interest).At a more realistic margin rate of 7%:Final value: 72,257Total margin interest: $12,760===================So you get an idea of why people here aren't terribly excited about margin leverage. You made an extra $2200 and the broker made $13K.Or you made $8400 and the broker made $7K. You took on additional risk but the broker got the lion's share of the benefit.
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