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    BindlePete:

    Very intuitive look at what can only be a difficult task in the best of times, and certainly so now. I had a client recently who wanted to use the equity in their homes (via a reverse mortgage) to invest in the markets.

    On the one hand (personally speaking) I'll take some risk, however when dealing with clients I can't in good conscience advise them to use borrowed money for investments. On the flip side, it not actually borrowed (in a way) since it's the equity in their home, and money they have paid in, and inflation has carried to lofty heights.

    You certainly have a valid point on the free money scenario, unless you factor in risk. I'm not adverse to risk, yet it is something all investors, even conservative ones must factor in (based on the recent mutual fund collapse).

    While free money is great, make certain to NOT "let it ride", and pay it back as soon as possible. At that point, then you are truly riding a wave of growth on free money.


    On Apr 03 10:09 AM bindlepete wrote:

    > This is a pretty silly analysis in one regard. True, leverage can
    > work against you in hard times but when interest rates are well below
    > the inflation rates it could well be a time to borrow as it is essentially
    > "free" money. Pay it back with peanuts.
    >
    > Now if you are in a regulated or solid business situation such as
    > a utility or Rail Road (these rail roads folks are on the uptick
    > due to the spiking energy costs of trucking and need for commodity
    > exports coal grain etc) leverage at a less than zero cost makes a
    > lot of sense. The utilities are guaranteed a profit if they are a
    > regulated outfit so they will get their interest back no matter.
    > ( This is not true for 3rd party producers.)
    >
    > The rail roads do have pricing control outside their contractual
    > agreements and here, unless they are fools, they should have themselves
    > covered for inflation.
    >
    > If you do not think we are in an inflationary environment google
    > Shadowstats . what is going down other than housing ?
    >
    > Food no, Medical no, education no, labor no, energy no, enertainment
    > no, clothing perhaps a trifle, rent no, taxes, no . The BLS is cooking
    > the figures. Since Clinton they have been lying to us.
    Apr 04 11:21 am |Rating: +3 -2 |Link to Comment
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