That sounds like a good way to cure constipation.
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Absolute lunatic strategy by SailorRob.
You could become become very rich or bankrupt.
Not sure who is going to lend to you to borrow 200% let alone 800% of your net worth against an equity portfolio.
What happens if that portfolio loses 20% and you have borrowed 2 x or 8 x your net worth?
Meanwhile paying double digit interest rates as I would like to see any lender lending against a leveraged equity portfolio at anything below 10%.
But let's all learn something 🤣
This is the same guy who said recently that the economy was running hot.
I probably don't need to put out this warning as it should be quite apparent to most.
But the advice from this guy is dangerous.
Anyone can get lucky. Are you feeling lucky punk? 😅
Forget about the fact that I said NON RECOURSE. And CHEAP.
If your portfolio loses 20% then you'll just end up richer assuming it's lost 20% due to market not less discounted future cash flow value.
This is essentially Berkshires operating model.
Berkshire borrows at negative nominal rates for their stock portfolio...
Any serious equity investors here who can state why, if you're young and could obtain non recourse funding at cheap rates, you wouldn't borrow 200% of your net worth to invest in productive equity assets provided you know what you're doing and can generate a volatile 10% return over the years vs much lower cost of debt?
The response from the Day Trader did not take into account the conditions that I stipulated.
yep right stocks and your away laughing. got a flexi - loan in late 2007 and went on a buying spree in 2008 during the gfc doubled up with a margin loan on the stocks i brought with the flexi - loan as well to buy even more stocks. all this with rates similar to now.
although i must agree if it had not gone my way i would have lost a lot .... you need to know what your doing with this sort of levergage
I agree if the loan was cheap to service, non recourse and non callable, it probably would make sense to take out a large loan to invest in productive assets.
Being non callable is important I think as volatility is to be expected and it'd suck so bad to be right about an investment but be margin called because the price of the shares fell.
I had a flexi sitting undrawn in 2020, saw the opportunities and went with what I thought were "can't lose" choices. No regrets!
I figured if it went badly for me everyone would be stuffed too!
yea and do it with stocks that pay a dividend and are good companies , not spec stocks , that takes care of the int bill to a large degree