Margin Accounts

[Degen]

Ok I'm really new to all of this, so feel free to flame me if this is a bonehead question/post.


I wanted the ability to sell short, so I called my online broker and asked why I wasn't able to do this. They told me that I had to have margins activated in order for this to work.

Ok, so I applied for margins and got approved.


I'm reading the margin materials and it says you can use this to deal with short-term financial problems for personal or business use. I call in to inquire about this and I am told that for every dollar in my account, they will allow me to borrow one dollar at 9% interest. So essentially I am getting back the money that I put into the account. I can then buy stocks with the balance, which is really their money.



Ok so say I have $10,000 in my account. I pull it out and have $10,000 in cash and $10,000 to buy stocks with. Then I use that to open a new account, do the same thing and now I have $20,000 to buy stocks with and $10,000 in cash. Repeat, repeat, repeat.

Not that I would want to do this with my knowledge, but if one could beat the juice with their stock picking prowess...isn't this a way to exponentially grow your purchasing power with basically no capital of your own at work?

Am I missing something here?