This remarkable CNBC clip about a rural farmer who bought $1 million in stocks at an incredible 6x leverage. You can probably guess how it ends, but you might want to watch the story anyway. The poor farmer in the video was sold out of his positions, and he now owes the brokerage company more than his original investment.
Anyone who reads this knows that investing everything you have and then borrowing six times more money that you don’t have to throw it all into a single stock is a really bad idea. Apparently this is not so obvious to Chinese farmers.
Chinese investors are basically momentum players. Combine that approach with the well-known Chinese predisposition toward gambling and you get an explosive mix.
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