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Buying on margin allowed investors to purchase more stocks than they could afford by borrowing money from brokers, which amplified their buying power. This increased demand for stocks contributed to rising prices in the bull market of the late 1920s, as more investors entered the market with borrowed funds. The practice created a cycle of optimism and speculation, reinforcing the bullish sentiment and further inflating the market bubble until it ultimately contributed to the 1929 Stock Market crash.

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