alt Hacker Newsokay, another example:
You hold Enron stock. You’ve been taxed 5% annually on the holdings for the past 5 years. To pay the tax, you decided to take out a loan instead of selling shares to pay the tax (you want to stay invested).
Someone discovers Enron is a fraud, the stock goes to $0 and you go bankrupt because you can’t repay the loans you took out to pay the tax on a (now worthless) asset.
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The situation you're describing is equivalent to paying your 5% in asset tax the normal way (by giving up 5% of the asset) and then saying "I love enron, let me take out a loan to buy stock with!" Buying stock with a loan is an obviously stupid move, and wanting to "stay invested" is nothing more than a rationalization. Keeping the same percentage of your wealth in the stock is already staying invested. Increasing the percentage for the sole purpose of keeping the same number of shares is a bad idea.
And this hypothetical me, having to pay a wealth tax, is way way over the line of needing a financial advisor, so that advisor will be telling me it's a bad idea to take out loans to buy stock.
Were you smart, you'd have used your enron stock as the collateral in which case both you and the bank get screwed if the value goes to 0. You default on the loan, you don't have to go bankrupt in this case. Your credit takes a hit for 7 years.
But yeah, if you take out a loan against your home and the housing market collapses and you lose your job (ala 2008) you can end up destitute. The stock market is always a gamble and this doesn't make that better or worse.