May 2023 Mailbag: 100...And Two Hills
Rule Breaker Investing
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How to Avoid Leverage in an Equity Account
There are other reasons investors might commonly be on margin beyond just the I'm tempted to buy too much of a stock that I think too much of. The first is the good use of debt, whereas a company borrows at a low rate and earns a higher return on that capital as it happens all the time. Of course, it can also bite you as in the great financial crisis when people overpaid for houses, unborrowed money, and then walked away. With investing, I do not advocate borrowing money to buy stock. Equity is too volatile. We know even great businesses can get cut in half in the drop of a hat,. Even if they recover a year later, completely
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