The higher the 'debt' to equity the better. Like seriously better.
Thanks for playing.
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Look it up. It's there for everyone to see.
That's the problem with your one eyed approach, I don't care about the day to day. 🤣
I invest in good management. I.e look after the day to day. I think if you apply the Buffett approach so does he. Picking & choosing your Buffet rules?
Man, if there is a definition of a spruiker, you are it.
It's BuffeTT
I did not say that I dont care about the day to day.
I said 'I don't care if money is made day to day'
Warren and I are alike in this regard, he doesn't care about volatility. Neither of us would care if a business lost money in 9 out of 10 years, provided it still made sense, which it could.
Oh buddy you are full of it.
Making money day to day should be the premise of any business that has been in business as long as OCA. RYM don't seem to experiencing that same volatility in the day to day. So what does that say? Perhaps they are just better run.
They were also smart enough to reduce debt.
As I have said before OCA should have done the same when the going was good, and at at a much less cost to shareholders.
Hi Toddy,
Interested to know what you would buy on the NZX.
As there are many companies with 10 and 20 years wiped off the SP I have been looking through the wreckage and aside from retirement sector I can't see anything that remotely interests me, would appreciate some leads on say the top 5 ex retirement sector that you would like to buy.
If you don't mind me asking, what type of farm are you running and what cash returns on the money you have invested does it return average over 5 years. No problem if you don't want to discuss.
Only even consider doing this if you have a long term track record of investing in equities and earning a return that is a good spread over the average cost of debt over a normal cycle.
Business debt I assume has a rate north of 8% at the moment and probably 7 over a normal cycle, so you'd want a record of doing at least 10 and without too much vol for it to make sense to do this. You'd also want a long record of behaving appropriately in a severe crash, GFC/Covid style.
Even with all this, you're going to earn a max 3% spread over the debt and take on a lot of risk to do so where you might get a lot less than the 3% spread.
Is it worth it?
There are certainly times that it does make sense, I borrowed significantly to buy more Berkshire at and around $250 for example.
Nothing at all wrong with what you are suggesting but...