Comments on: Before the Crash: Buying Stocks With Debt http://queercents.com/2007/02/23/before-the-crash-buying-stocks-with-debt/ We're here, We're queer, and We're not going Shopping without Coupons Thu, 18 Mar 2010 03:42:20 -0700 http://wordpress.org/?v=2.9.1 hourly 1 By: The Skilled Investor http://queercents.com/2007/02/23/before-the-crash-buying-stocks-with-debt/comment-page-1/#comment-21391 The Skilled Investor Mon, 05 Mar 2007 19:58:51 +0000 http://www.queercents.com/2007/02/23/before-the-crash-buying-stocks-with-debt/#comment-21391 Festival-of-Stocks_03-05-07-B<a href="http://www.theskilledinvestor.com/wp/archives/51" rel="nofollow">Festival of Stocks -- March 5, 2007 Edition</a>Welcome to the March 5, 2007 edition of the Festival of Stocks, which includes the article that you are reading. Thank you for stopping by to browse.    <a href="http://www.theskilledinvestor.com/wp" rel="nofollow">The Skilled Investor</a> <p class="top-comments">Current score: <span class="top-comments-karma" id="karma-21391">0</span> <small>(to vote for this comment, please visit the site)</small></p> Festival-of-Stocks_03-05-07-BFestival of Stocks — March 5, 2007 EditionWelcome to the March 5, 2007 edition of the Festival of Stocks, which includes the article that you are reading. Thank you for stopping by to browse.    The Skilled Investor

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]]> By: ~Dawn http://queercents.com/2007/02/23/before-the-crash-buying-stocks-with-debt/comment-page-1/#comment-18933 ~Dawn Mon, 26 Feb 2007 00:46:33 +0000 http://www.queercents.com/2007/02/23/before-the-crash-buying-stocks-with-debt/#comment-18933 I just read in the paper that we may be nearing the end of the bull market, as this has been the 3rd longest on record. It would be a good investment to all in the stock market to consider that the fun does end at some point and you don't want to be stuck cleaning up the mess.<p class="top-comments">Current score: <span class="top-comments-karma" id="karma-18933">0</span> <small>(to vote for this comment, please visit the site)</small></p> I just read in the paper that we may be nearing the end of the bull market, as this has been the 3rd longest on record.
It would be a good investment to all in the stock market to consider that the fun does end at some point and you don’t want to be stuck cleaning up the mess.

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]]> By: Daniel O'Connor http://queercents.com/2007/02/23/before-the-crash-buying-stocks-with-debt/comment-page-1/#comment-18478 Daniel O'Connor Fri, 23 Feb 2007 20:47:02 +0000 http://www.queercents.com/2007/02/23/before-the-crash-buying-stocks-with-debt/#comment-18478 Rich, Good post with wise words of caution. Most people are still not aware of the extent to which all asset prices, from stocks to homes to bonds to GDP, are being supported by the ever-expanding bubble in debt rooted in the design of our currency. For whatever it might be worth, I explained this situation a while back in an essay entitled Debt Trap: http://www.catallaxis.com/2006/01/debt.html Not only is it nearly impossible to avoid borrowing money in order to buy one's way into this debt-based economy of ours. It is also difficult to insulate ourselves from the downside risk of a debt deflation in a particular asset class that has been pushed too high, too fast by leveraged speculators. In other words, even if many of us are not buying stocks on margin, we are still exposed to the downside systemic risk that is accumulating in the markets due to the leveraged speculation of others. And even if stocks continue to generate positive returns to investors, we have to be careful to adjust these returns for the very high and still growing risk associated with those returns. For some investors, like those you mentioned, the risk-adjusted return on stocks may be lower than the risk-adjusted return on CDs.<p class="top-comments">Current score: <span class="top-comments-karma" id="karma-18478">0</span> <small>(to vote for this comment, please visit the site)</small></p> Rich,

Good post with wise words of caution.

Most people are still not aware of the extent to which all asset prices, from stocks to homes to bonds to GDP, are being supported by the ever-expanding bubble in debt rooted in the design of our currency.

For whatever it might be worth, I explained this situation a while back in an essay entitled Debt Trap: http://www.catallaxis.com/2006/01/debt.html

Not only is it nearly impossible to avoid borrowing money in order to buy one’s way into this debt-based economy of ours. It is also difficult to insulate ourselves from the downside risk of a debt deflation in a particular asset class that has been pushed too high, too fast by leveraged speculators.

In other words, even if many of us are not buying stocks on margin, we are still exposed to the downside systemic risk that is accumulating in the markets due to the leveraged speculation of others. And even if stocks continue to generate positive returns to investors, we have to be careful to adjust these returns for the very high and still growing risk associated with those returns. For some investors, like those you mentioned, the risk-adjusted return on stocks may be lower than the risk-adjusted return on CDs.

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