With stocks soaring and interest rates parked at historic lows, the last few years have been boom times for leveraged investing. According to data from FINRA, margin accounts have ballooned from less than $200 billion in February 2009 to $355 billion in December 2012. (The peak was $416billion, in July 2007.)
Yet leveraged portfolio strategies retain their bad reputation among many advisors, frowning on the speculative practice of using margin to try to turbocharge returns. "My advice to clients over my 20-plus years has always been to never buy on margin," says Chris Parr, who heads Parr Financial Solutions, a wealth management firm in Columbia, Md. "You should not invest what you don't have."
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