1. High-Risk Investment Techniques
Buying long
Buying stocks expected to increase in value, which can then can be sold at a profit
Selling short
The process of selling stock that an investor does not actually own but has borrowed from a brokerage firm and will repay at a later date
Assuming that the stock is overvalued and will soon decrease in price, the investor intends to repay the brokerage later with less costly stock, resulting in a profit for the investor
Buying stock on margin
Buying stock by borrowing part of the purchase price, usually from a stock brokerage firm
Margin requirement—the portion of the price of a stock that cannot be borrowed; set by the Federal Reserve Board
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2. High-Risk Investment Techniques (cont’d)
Other high-risk investments
Stock options
Commodities
Precious metals
Gemstones
Coins
Antiques and collectibles
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