Why Margin Borrowing Is Risky in a Weak Job Market

The most expensive mistake: borrowing when your paycheck isn’t bulletproof

. Look, the priciest error I keep seeing this year isn’t some exotic options strategy, it’s taking on margin right before your income gets wobbly. When jobs wobble, liquidity matters more than bravado. Margin feels like “extra buying power,” but it’s not a gift. It’s a loan with a timer and a referee who doesn’t care about your confidence level.

Here’s the thing: margin is a cash-flow promise you have to keep, especially when markets and paychecks don’t cooperate. We’ve all seen the combo punch: portfolio down, hours cut, bonus delayed, or a layoff hits. History shows this isn’t hypothetical. The S&P 500 fell about 34% in 33 days in 2020, and the U.S. unemployment rate spiked to 14.7% in April 2020 (BLS). In 2008-2009, stocks fell roughly 57% peak-to-trough. And speaking of which, margin activity is never small; FINRA reported margin debt hit a record ~$935 billion in October 2021, when borrowing collides with volatility, the clean-up can be ugly.

Anyway, margin calls don’t wait. Your broker can liquidate positions the moment your equity slips under maintenance. They won’t ask about your long term thesis on semis or energy, they’ll just sell. I’ve seen this movie a few times. Personally, I once watched a very smart engineer in 2022 get forced out of a terrific position, company recovered later, of course, because his RSUs were underwater and his overtime dried up. Great thesis, bad timing, zero cash flow slack.

Cash flow beats confidence, margin calls don’t care about your thesis.

Actually, let me rephrase that: margin isn’t just risk; it’s a schedule, interest accrues daily, collateral gets marked-to-market by the hour, and the bill shows up precisely when your paycheck might not. That’s why borrowing against volatile assets while your job outlook is softening is, in 2025, the most expensive mistake I’m seeing. The question I keep getting, “is-using-margin-smart-amid-weakening-job-market?”, is fair. The short answer: only if your cash flow can take a market gut-punch without you having to sell into it.

What you’ll get from this section:

• Margin is a loan with a timer, not free buying power. The clock runs whether you sleep or stress.
• Income risk + market drawdown = forced selling at the worst time. 2020 taught that brutally: stocks off ~34% in a month while unemployment spiked (BLS data).
• Cash flow beats confidence, because margin calls are automated, not empathetic.

We’ll frame margin as a cash-flow commitment first, a strategy second. And I was going to walk through broker maintenance math step by step, but honestly, the math is the easy part, the hard part is keeping a paycheck steady when your sector starts trimming headcount or your commission pipeline goes quiet. Later this year, if volatility picks up around earnings season again, and it always seems to, having dry powder beats explaining to your broker why your model “should” work.

So, if your income isn’t bulletproof right now, contract role, cyclically sensitive industry, bonus-heavy comp, treat margin like a payday loan wearing a nice suit. It’s expensive when the world wobbles, and the world does wobble. We’ll keep it practical and show how to line up liquidity so you don’t have to learn the hard (and costly) way.

So, what’s actually changing in the job market right now?

Here’s the thing: the labor backdrop in 2025 is cooler than the post-pandemic sprint. The BLS monthly jobs reports this year show slower net hiring versus 2023, nonfarm payroll gains averaged about 251k per month in 2023 (BLS), while 2025 year-to-date is running closer to the mid‑100s. I’m not saying the floor’s falling out, just that the pace is clearly slower, and the tone of hiring freezes and “prioritization” memos is, you know, louder.

Openings tell the same story. BLS JOLTS job openings peaked at roughly 12.0 million in March 2022. As of mid‑2025, readings are closer to around 8 million, give or take depending on the month. That’s still a lot of demand for labor, but it’s a big step down from the frenzy. When openings drift lower and time-to-fill stretches, wage growth cools and bonuses get… negotiated.

BLS datapoints: 12.0M openings at the March 2022 peak; ~8M range in recent 2025 JOLTS prints; 2023 payroll gains averaged ~251k/month vs a slower 2025 pace.

Look, I get it, most folks don’t stare at JOLTS tables for fun. But your margin risk doesn’t care. Policy rates are still elevated relative to 2020-2021. The Fed’s target range has sat at 5.25%-5.50% since July 2023, and “higher for longer” hasn’t budged much in 2025. That keeps broker margin rates expensive: at major shops, five-figure balances often price in the high single to low double digits, 8% to 12% isn’t unusual right now. Paying 9-11% to borrow against a portfolio while your bonus is “under review”? That’s a tough spread to carry.

And the vibe matters. Layoff headlines feel more frequent this year, some tech, some ad spending sensitive, some old-line industrials trimming shifts. Even if the layoffs aren’t in your zip code, they change how CFOs behave. Hiring pauses become the default. Recruiters stop calling. That slower churn, combined with spotty earnings and choppy price action, creates the exact scenario where a margin call shows up at the worst time, like a smoke alarm at 3 a.m.

Anyway, translating all of that into portfolio reality:

• Income variability is up, smaller hiring gains vs 2023 and fewer openings vs 2022’s peak mean paychecks are slightly less predictable.
• Carry costs stay high, with the policy rate pinned at 5.25%-5.50%, margin interest hasn’t “normalized”; it’s sticky-expensive.
• Volatility + job jitters = timing risk, you’re more likely to recieve a margin call when you least want to sell.

This actually reminds me of a client in ’09 who was right on the thesis but wrong on the financing, paid double-digit margin while his employer “restructured” comp. He survived, but barely. Actually, let me rephrase that, his portfolio survived. He needed a year to dig out. The thing is, 2025 isn’t 2009, not even close, but the math on expensive use against shakier cash flows rhymes. I’m enthusiastic about opportunity, I really am.. but that’s just my take on it.

How margin really works when markets and paychecks get mean

So, mechanics first, real life second. Initial margin is the down payment; maintenance margin is the ongoing minimum equity you must keep. Under Reg T, the initial requirement for U.S. stocks is 50% (that’s been the number since the 1970s). FINRA’s Rule 4210 sets a minimum maintenance of 25%, but most retail brokers use 30%-40% for plain-vanilla equities, and they can raise “house” requirements whenever they feel jumpy. And they do when vol spikes.

Here’s the thing: a 15%-30% drawdown can trigger a call fast if you’re near max use or your broker hikes maintenance mid-storm. Quick math with 2:1 use (you put in $100k, borrow $100k, own $200k of stock):

• At a 30% maintenance level, a ~28.6% portfolio drop breaches maintenance. ($200k → $142,857; equity $42,857 on $142,857 MV = 30%).
• If the broker lifts maintenance to 35% during a vol shock (not rare), the breach happens around a 23.1% drop.
• At 40%, you’re in trouble after roughly a 20% decline. Speaking of which, we’ve seen 1-3 week 20% drawdowns in individual names plenty of times these last few years.

What happens at breach? You add cash or you sell, usually into weakness. Brokers don’t negotiate with vibes. If you don’t meet the call on time, they liquidate positions (no permission slip needed), and they’ll hit whatever bids are there. During stress, bids back away. The average bid-ask on SPY widened multiple-fold in March 2020 (cents to nickels and dimes), and single-name spreads went 3x-10x; in 2022’s CPI shock days when the VIX ran north of 30, we saw similar patterns. It’s not abstract: worse spreads + thinner depth = lower execution prices when you’re being forced to hit the exits.

Interest is the sneaky part. It accrues daily and compounds. As of September 2025, retail margin rates are still sticky-high, many brokers quote ~10%-13% APR on sub‑$100k balances, with tiered discounts at higher amounts, because the fed funds target range remains 5.25%-5.50% (same range set in July 2023 and still in place this year). On an $80,000 margin balance at 10.75% APR, you’re looking at roughly $23.56/day in interest; that’s about $707 in a 30-day month, compounding if you don’t pay it. Anyway, that interest continues even while you’re “waiting for the bounce.”

Sequence-of-returns risk is where it really bites. Average returns don’t save you if the path forces you to delever. Example: start with $100k equity, borrow $100k (2:1). Day 1: −20% market move. Your portfolio drops to $160k; equity is $60k (37.5% of MV). If maintenance just ratcheted to 40%, you’re at risk of a call and may have to sell into the hole to get back above 40%. Day 2: market rebounds +20%. Sounds great, but on a smaller base and with less exposure, your recovery is muted. The sequence is brutal: down first, forced trim, then up, net result is you lag badly even if the two-day average return is about flat. I watched a desk-mate in 2011 live this in small caps; he was right directionally, but the order of the moves, and a raised house margin on one name, did the damage.

Path dependency matters more than the average. A +10%, −10% year averages to roughly −1% unlevered, but with use, interest drag and forced sells can turn that into −10% or worse. And that’s before taxes and slippage.

Maintenance margin breaches force binary choices. Add cash or sell. If your paycheck is wobbly, “add cash” isn’t always an option.

Two practical takeaways, and I’ll keep it blunt: (1) Don’t run at the redline. Holding some excess equity above maintenance, think a buffer of 10-15 percentage points, reduces the chance you’re a forced seller on a routine drawdown. (2) Watch your carry cost daily. If you’re paying 11% and your expected edge is, you know, 6% with volatility, the math doesn’t pencil. I was on a call earlier this year where a client said, “I’ll just ride it out”, and then their broker adjusted maintenance on a concentrated biotech basket to 60%. Ride was over by lunch.

Actually, let me rephrase that, margin isn’t evil. It’s just a tool that gets mean when income is uncertain and volatility widens spreads. And brokers… they don’t care about your thesis. They care about collateral, which can shrink overnight. That’s the part people forget until they get the email at 7:02 a.m.

Do the math: your real breakeven after interest and taxes

Here’s the thing, this is napkin math you can do over coffee. Start with your after-tax expected return and compare it to your all-in borrowing cost. If your expected return is 8% but your broker is charging 9-11% APR right now (which is what many retail accounts are seeing in September 2025 on sub-$100k balances), you need either outsized alpha or perfect timing, and, you know, timing has a way of not cooperating exactly when you want it to.

Step 1: After-tax expected return
• If you think your stock will return 8% over the next year and you’ll hold long enough for long-term capital gains, haircut that by taxes. Federal LTCG is 15% or 20% depending on income, plus the 3.8% NIIT for higher earners (these rates are current for 2025). So an 8% gross becomes roughly 8% × (1 − 0.238) ≈ 6.1% if you’re in the 20%+NIIT bucket. If your hold is short-term, use your ordinary rate, say 32%, so 8% × (1 − 0.32) ≈ 5.4%. That’s your after-tax expected return.

Step 2: All-in borrowing cost
• Your posted margin rate is the start. Many brokers are quoting around 9-11% APR this month, with higher quotes on smaller balances and some promotional tiers a bit lower for large accounts. Interest on margin is often not fully deductible unless you itemize and qualify for the investment interest expense deduction (and even then it’s limited to net investment income). Practically, most people should treat that 9-11% as an after-tax cost in their breakeven. So if your after-tax expected return is 5.4-6.1% and your cost is 10%, you’re negative spread by roughly 3.9-4.6 percentage points. That’s not investing; that’s hoping.

Quick breakeven rule: margin “makes sense” only if your after-tax expected return minus your after-tax borrowing cost is clearly positive by a few points, not by a rounding error. A 1% sliver doesn’t cut it because slippage, fees, and, frankly, bad days happen.

Stress-test it (do this before you click buy):

• Assumptions: $100,000 portfolio, borrow $30,000 on margin at 10% APR, stock drops 20%, you’re on margin for 60-90 days.
• Interest accrual: 60 days ≈ $30,000 × 10% × (60/365) ≈ $493; 90 days ≈ $740. Small in dollars, but it hits when you’re already down.
• Portfolio impact: $100,000 goes to $80,000 after a -20% move. Debt becomes ~$30,493 (60 days). Equity = $80,000 − $30,493 = $49,507. Your equity ratio is ~62%, which sounds fine, until your broker raises maintenance on your names or you had less starting buffer. At higher use (say borrow $50,000), equity after the drop is $80,000 − ~$50,493 ≈ $29,507 and you’re flirting with maintenance depending on your broker’s house rules.
• Taxes make recovery slower: any rebound you sell to de-lever may be short-term taxed at your ordinary rate, so your path back is steeper than the simple price chart suggests.

Sanity check framework (use this like a checklist):

1. Compute after-tax expected return: expected % × (1 − your applicable tax rate).
2. Compare to your all-in margin APR (assume not deductible unless you’re certain it is).
3. Run the -20% shock with 60-90 days of interest at your current posted rate. If you can’t hold without hitting maintenance, it’s a no.

If the spread isn’t clear and positive, you’re speculating, not investing. Look, I get it, big moves tempt all of us. I watched a friend earlier this year convince himself his “edge” was 10% on a trade while paying 11.5% on margin; the edge evaporated into the carry before the thesis even had time to work. And with the job market wobbling a bit this year compared with last year, bonus pools are tighter and layoffs have been in the headlines, relying on future cash to plug a margin hole is, basically, wishful thinking. If your napkin math doesn’t scream yes, it’s a no for now.

Guardrails if you still insist on using margin (I get it)

If you’re going to pull the margin lever, do it like a pro, because the amateur version usually ends with forced sells at the worst possible time. Here’s the thing: the rules aren’t complicated, but you have to actually follow them when it’s uncomfortable.

• Keep real maintenance headroom. Maintain at least 15-25% equity buffer above your broker’s maintenance requirement. For context, FINRA’s baseline maintenance is 25% for long equities (FINRA Rule 4210), while many brokers use house minimums of 30-40%. If your broker’s house is 30%, target 45-55% equity. That’s how you avoid reflexive liquidations when volatility spikes.
• Position sizing that survives a -30% hit. Size each position so a 30% drawdown won’t trigger a margin call without outside cash. If you need to wire money to survive a routine growth-stock drawdown, you’re not investing, you’re hoping. I’ve learned that the hard way, twice.
• Hard stop-loss logic. Pre-commit levels and automate where possible. Either a price-based stop (e.g., -20% from cost) or a vol-based stop (2-3× ATR) is fine; just don’t move it lower in the moment. Actually, let me rephrase that… never move it lower.
• Set a max carry budget. Define a monthly cap for interest spend and cut exposure the month you hit it, no “one more week.” With Regulation T still setting initial margin at 50% (Federal Reserve Board) and brokers typically charging a spread over their base rate, carry drifts on you. If your cap is $400/month and you hit $401, trim that day. I know it sounds rigid; it’s supposed to.
• Pre-fund a ‘margin call bucket.’ Before adding use, hold 3-6 months of living expenses in cash or T-bills; make it 9-12 months if your income is cyclical or bonus-heavy. This isn’t optional. I occassionally see smart folks rely on next quarter’s bonus… then the bonus gets cut.
• Tripwires tied to your job risk. If layoffs in your industry pick up or your comp becomes less certain, automatically drop use by 25-50%. Job market noise matters to your P&L. I’m still figuring this out myself, but it’s saved me more than once.

Quick reality check: when headcount risk rises, correlations rise. Your portfolio and your paycheck can fall together, fast.

A few practical numbers to anchor you

1. Equity ratio floor: If your broker’s maintenance is 30%, operate at a personal floor of 50% equity; raise to 55% if vol spikes. That’s the 15-25% headroom in action.
2. Stress math: On a $100k account with $50k debt (Reg T 50%), a 30% portfolio draw takes equity from $50k to $20k. Against a $50k debt, you’re at 28.6% equity, below many house mins. That’s why you size so -30% doesn’t put you there.
3. Carry discipline: Cap interest at, say, 0.5-1.0% of account equity per month. Hit the cap? Cut 20-30% of gross exposure the same week; don’t negotiate with yourself.

Look, margin can work, but only if you treat it like a business with rules and pre-funded reserves. And yeah, markets this year have been choppier around policy headlines and earnings revisions, so these buffers matter. You won’t nail this perfectly, I sure don’t, but the point is to avoid the catastrophic error. You know, the one where you get sold out at the bottom because you tried to recieve an extra 2% carry… but that’s just my take on it.

Smarter plays in a softer labor market

Here’s the thing: when the job market softens, the market’s risk appetite tends to wobble, earnings revisions get choppier, cyclicals trade more on every data print, and your cost of carry matters way more than it did when everything felt easy. The BLS unemployment rate ticked up to around 4.2% in August 2025 (vs. roughly 3.8% late last year), and JOLTS openings are down to the mid‑7 millions as of July 2025, which puts the openings‑to‑unemployed ratio near ~1.2x from ~1.5x a year ago. Not a crisis, but softer. That’s your cue to shift from open‑ended use to structures that shape risk, not amplify it.

Use options to cap the tails, not your sleep

• Cash‑secured puts and covered calls: Sell puts on names you actually want to own at lower levels, with the cash parked to take assignment. Or overwrite existing holdings with covered calls to harvest some premium while you wait. You’re swapping some upside for defined income, and in a market that might drift or chop, that’s fine. I occassionally do 30-60 day tenors because they line up with earnings windows and the vol is “there.”
• Defined‑risk spreads: If you need more convexity, use vertical spreads (put spreads for downside hedges, call spreads for upside expression). You cap loss, you cap gain, you avoid the oh‑no moment where naked options or margin spiral on a gap move. Smaller debit, known max loss, simple concept, yes, but worth saying too many words about because people forget when they get excited.

Hold T‑bills for carry instead of paying it away

Speaking of which, the risk‑free carry is still decent. As of early September 2025, 3‑month Treasury bills are printing roughly 4.7%-5.0% annualized on H.15 quotes, with recent auctions hovering near the high‑4s. Meanwhile, many retail brokers still charge 8%-11% APR on margin balances right now (yes, even after a couple of rate cuts this year). So, why borrow at 9% to chase a 6% idea when you can earn ~5% sitting in short‑duration Treasuries or a T‑bill ETF and wait for better prices? It’s boring, and boring is underrated, especially when payroll prints keep coming in mixed and revisions bite.

If you must use use, keep it product‑level and sized small

• Leveraged ETFs: They can work, briefly. But they decay when vol chops and the path is messy. Keep them as tactical instruments with defined holding periods (days to a few weeks), monitor realized vol, and size tiny. Personally, I cap any single levered ETF to 1%-2% of portfolio NAV and I don’t “average down”, I time‑box the trade. Enthusiasm drops fast when you watch the math of daily rebalancing grind your P&L on a sideways tape, and yes, that’s experience talking.
• Know the decay math: A 2x fund in a ±2% daily chop can lag the index by several tenths of a percent over a month, compounded, that’s real. Don’t pretend it’s a long term substitute for futures or clean exposure; it isn’t.

Portfolio margin is not a personality trait

Only use portfolio margin if you genuinely understand cross‑asset correlations and how they behave in stress, equities down, rates rally, credit spreads widen, vol spikes, sometimes all at once. Backtest your book with a -30% equity shock and +15-20 vol points, and then add a rate gap for good measure.

Anyway, the theme is simple: replicate exposure without the cliff risk. Use cash‑secured options instead of open‑ended margin, harvest the 4.7%-5.0% from short T‑bills while you wait, and if you really need use, push it into product‑level structures where the decay is known, the sizing is small, and the exit is pre‑written. Actually, let me rephrase that, write your exit before you enter. You probably won’t nail the timing, I certainly don’t, but you’ll avoid paying 9% to own something that moves 0.3% a day while the labor market sends mixed signals and earnings quality gets tested.

Bottom line: borrow against certainty, not hope

Look, margin can make sense, but only when the numbers are boringly, stubbornly in your favor. If your after‑tax expected return doesn’t clearly beat your borrowing cost, you’re just lighting cash on fire and hoping the wind blows the other way. Simple example that isn’t theoretical at all: if your broker’s all‑in margin rate is ~8-10% this year (many retail schedules sit in that range, and house maintenance often runs 25-35%), your equity pick has to reliably clear that hurdle after taxes and slippage. Long‑term capital gains are up to 20% federally plus the 3.8% NIIT (per IRS rules that haven’t changed since 2013), and some states add real bite (California’s top marginal rate is 13.3%). So, that “expected” 10% gross can easily compress to 6-7% after tax and costs, below your borrowing cost. Negative spread, no thank you.

Employment risk and market risk multiply each other, don’t ignore the math. If the market drops 30% and at the same time your sector freezes hiring, the issue isn’t the drawdown alone, it’s the cash flow gap arriving exactly when your collateral shrinks. We’ve seen how fast correlations go to one in stress: the S&P 500 fell about 34% from Feb 19 to Mar 23, 2020, while the VIX spiked above 80 (Mar 16, 2020). Margin calls don’t care about your thesis. Reg T lets you borrow up to 50% initially, but house maintenance (often ~30%) means a -25% to -35% move can force sales at the worst moment. That’s just the mechanics.

So, build buffers first. Three pillars:

• Cash reserves: Aim for 6-12 months of core expenses in highly liquid stuff. Short T‑bills have been yielding roughly the mid‑4s to around 5% this year (varies by tenor and the day), which is perfectly fine “dry powder” that pays you to wait.
• Insurance: Disability insurance is the underrated income backstop. A long elimination period paired with a strong emergency fund keeps premiums sane. It’s boring, yes, and that’s the point.
• Diversified core holdings: Broad equity, some high‑quality bonds, maybe a dash of real assets. Unlevered compounding is slower, but it doesn’t send you a margin call at 3:12 p.m. on a random Thursday.

Here’s the thing, I’ve sat across the table from plenty of smart people who “only” needed markets to be up 8% while paying 9% carry. It works until it doesn’t. The math is plain: after‑tax return > borrowing cost by a comfy margin, or don’t borrow. And comfy means a few points, not a rounding error. Actually, let me rephrase that: you want room for being wrong and for spreads widening when you least want them to.

One tangential thought (but relevant): sequence risk is sneaky. If your job is cyclical, media, construction, startups, you name it, the bad year often aligns with market down years. You don’t just need a cash buffer; you need a longer cash buffer than your neighbor in a stable utility job. It’s a weird kind of unfair, but planning doesn’t care about fairness, it cares about survival.

And because I occassionally over‑explain: borrowing to buy an asset means two return streams show up, your asset’s return and the cost of money. If asset return is R and after‑tax borrowing cost is C, your net is R−C. If R is uncertain and C is fixed and high, your distribution shifts left. That’s it. That’s the tweet. People try to complicate it with narratives; the subtraction is what matters.

Anyway, if this got you thinking, the next sensible moves are practical: build a cash management ladder (3-12 months across checking, HYSA, and T‑bills), review disability coverage as your income backstop, and learn how to hedge concentrated stock exposure without lighting money on fire, think collars or structured notes sized small, with pre‑written exits. Margin is a tool, not a lifestyle. Use it when certainty beats hope by a mile, not by an inch.

Rule of thumb: if you can’t comfortably fund a multi‑month drawdown plus interest from your paycheck and cash bucket, skip the use. Markets can stay weird longer than your margin clerk stays patient.

Frequently Asked Questions

Q: Should I worry about a margin call if my hours might get cut this fall?

A: Yes. If income might dip, reduce or close margin now. Raise 6-12 months of cash, tighten stops, and set alerts on maintenance levels. Brokers liquidate fast, you won’t get a sympathy call. Cash flow beats confidence when markets wobble.

Q: How do I figure out a “safe” amount of margin if my job feels shaky?

A: Look, there’s no truly “safe” margin when income is unstable, but here’s a practical guardrail. First, hold 6-12 months of living expenses in cash or T‑bills before borrowing. Second, cap margin to 10-15% of portfolio value when your paycheck is uncertain. Third, stress‑test: if your holdings drop 35-50% (we’ve seen that: 2008-2009, and a 34% sprint in 2020), could you meet a call without selling? If not, you’re too levered. Fourth, compare borrowing cost to expected return; if your margin rate is 8-10% and your expected equity return is, say, 6-8% near-term, that’s a negative spread, don’t do it. Finally, line up cash sources in advance (HYSAs, CDs maturing monthly) and set a hard liquidation plan. I know it’s boring, but boring survives drawdowns.

Q: What’s the difference between using margin and a securities‑backed line of credit when my income is uncertain?

A: They’re cousins, but one shouts. Margin is broker credit tied to your trading account; it’s marked‑to‑market constantly, accrues interest daily, and triggers margin calls quickly. SBLOCs are separate credit lines secured by your portfolio, often with interest‑only payments and slightly more flexible covenants. But both can be called and both can force liquidation if collateral falls. Rates vary, margin can be tiered and higher; SBLOCs can price closer to SOFR + a spread, sometimes cheaper, sometimes not. SBLOCs don’t let you buy more securities (usually), which ironically can save you from doubling down at the wrong time. If your income is wobbly, neither is “safe.” Prioritize: build cash, lower volatility in collateral, and keep loan‑to‑value conservative (think ≤20-25% LTV). And read the fine print on maintenance requirements, brokers don’t negotiate mid‑storm.

Q: Is it better to pay down margin or keep investing if layoffs are hitting my industry?

A: Short answer: pay down margin first, then invest from a position of strength. Here’s the playbook I use with clients and, honestly, with my own accounts when things get choppy. Step 1: Build a cash runway, 6-12 months of expenses in cash or T‑bills. If you’re below that, divert every dollar to cash and margin reduction. Step 2: Triage positions. Example A: You’re paying 9% margin interest and holding a broad index fund you expect to return 6-8% near‑term, sell enough to eliminate margin. The guaranteed 9% you “earn” by not paying interest beats a maybe 7% market return. Example B: Concentrated stock with 30% vol and a 25% margin loan. A 20% drop can trigger a call. Trim concentration, reduce the loan to ≤10% of portfolio, or both. Step 3: Replace borrowing with safer liquidity, laddered T‑bills maturing monthly. Step 4: Only after margin is near zero and cash runway is set, resume dollar‑cost averaging. I watched a brilliant engineer in 2022 get forced out of a great name because overtime vanished. Great thesis, wrong cash flow. Don’t be that story this year.

@article{why-margin-borrowing-is-risky-in-a-weak-job-market,
    title   = {Why Margin Borrowing Is Risky in a Weak Job Market},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/margin-weak-job-market/}
}