The brunch attracted the hungry mouths, the thirsty throats and the tired hearts of the Left-Handed Mac-Users Group. The weekend was drawing to a close, and, what with the Bloody Mary Mix and the Mimosas, the sense of urgency took a breather.

For an hour all was right in the world. The frenzied lifestyles slipped into a lull, where the only pressing question was, "quiche, or raisin french toast?" Sitting at joined tables, the southpaws talked of life and investments on a crisp Sunday afternoon.

As they passed around the golden crackers and cheese oddities, the group pondered the steep market decline that had battered their portfolios the Friday before. Owning a computer relegated to second-class citizenship was bad enough; now their net worth was tumbling as well.

"I am maxed out," one said. "I am 100% invested and don't know how I'll be able to pick up any stock market bargains without selling things first."

Heads nodded, and syrupy forks struck teeth. Cash was an absent King.

"Margin," the long-faced waiter deadpanned.

"No, butter's fine," the fully-invested patron replied.

"No, not margarine, margin," he explained, his eyes alive with the gullibility he saw before him. His Mo Mental trainee name tag glistened, as he explained how one could borrow to buy more.

"Your stocks are an interest-free ATM Machine," he explained. "You can borrow up to the entire amount of your portfolio."

Just then Motley Fool stormed in carrying a tray full of Tia Maria-soaked cheesecake. He closed in, and Mo ran for cover in the kitchen. Motley eyed the feasting lot and began explaining the concept of margin.

*What Mo had misrepresented about margin was that...*

1) An investor must have a liquid net worth of at least $100,000 before being allowed to margin securities.

2) The borrowed money is not interest-free.

3) You can actually borrow more than 100% the value of your portfolio.

4) All of the Above.

Enter your selection in the field to the lower right, and get immediate feedback on the answer!

Say it Ain't So Mo! Busted again! The answer is #2, contrary to Mr. Mental's claim that it was like tapping an interest-free cash machine, an investor is charged interest on the borrowed amount. The actual interest will vary by broker -- in most cases also by the amount on margin itself -- but it is usually a couple of percentage points above the prime rate.

Does leveraged investing make sense? When interest rates are low, and margin rates are in the 9% range as they are now, then it might make sense to borrow at the low rate to invest in a stock market that has averaged returns a tad better, or to use a mechanical method like The Foolish Four that has averaged a lot better. Still, this is obviously speculative, since stocks and market are a volatile bunch, and a spike in interest rates will push up your interest expense.

While current margin requirements allow you to double the size of your existing portfolio (100% margin) the Fool never recommends (assuming you are comfortable with the risk of margin in the first place) going more than 25% on margin. The last thing you need, at a time when your portfolio is falling, is to be told you are over your margin limit (because the amount borrowed must never surpass the current market value of your stocks). When that happens, your day of reckoning is nigh, and your margin-borrowing has become a mistake.

The now-bloated crew thanked Motley and waddled out of the eatery: mouths fed, thirsts slaked, hearts replenished, and minds renewed. They were ready to live, to invest, and yes, to eat, another day.

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