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hereamp;#39;s why margin debt sucks margin debt is debt against your stocks it allows you to take money out of your stock portfolio without actually selling your underlying holdings this is how a lot of rich people will spend money using their portfolio value without actually having to sell off their holdings and they donamp;#39;t have to pay taxes in the meantime but by far the worst thing about margin debt is that it exposes you to a potential margin call because the margin debt is tied to your underlying stock portfolio value if the stocks in that portfolio fall in price too quickly the brokerage that issues that margin debt can force you to sell those stocks at those lower prices in order to cover the debt the more margin you have the greater this risk of a margin call becomes just ask former billionaire bill huang who lost his entire five to ten billion dollar net worth in just a matter of days when his stock portfolio fell and he got margin called margin debt can dramatically i