“It is crazy in my opinion to borrow on security. You don’t know whether the stock exchange will open tomorrow morning,” Buffett said. Investors have borrowed record amounts to invest in the stock market amid the selloff earlier this month, according to a front page story in The Wall Street Journal on Monday.
“There’s no reason to borrow money except you’re in a hurry to get rich and you’re risking going broke. And ultimately, the effects it can have on your family? I do not believe in borrowing money on securities,” Buffett said.
“It’s insane to risk what you have and need for something you don’t really need. You know, borrowing money is a way of trying to get rich a little faster, but there are plenty of ways to get rich slowly.”
“Anything can happen in markets,” Buffett said later in the interview, returning to his earlier stated thesis regarding borrowing money to buy securities.
“When you’re just looking at the price of something, you’re not investing,” Buffett added, calling that gambling. Investors have to assess the business as a whole, not just the price of shares.
I thought Buffett uses margin. That’s part of his hold forever strategy. There’s no reason to sell a stock to buy another one. You just borrow against the first stock to buy the second one.
Not really. Selling is also strategy like buying, but the toughest decision, both Seth Klarmann and Buffet agrees, what is the right selling point and right selling time.
Buffet sells when he sees likelihood of company is going down. He does that very rarely, after years, like the one in GE, IBM…etc
Buffet has 1/3rd holding of BRK in stocks, balance 2/3rd 100% owned companies like Benjamin-moore, sees candies like that which produces enormous returns.
It’s insane not to use margin to maximize your gains. Stocks have never gone down to zero. The maximum S&P has ever fallen is 60 percent. So a calculated exposure to margin should do the trick.
Also, if you are not a buy and hold investor like @jil isn’t, its all the more reason to use margin. Because you believe you have good market timing, so you will sell off to cover the margin before the market tanks. So I don’t know why @jil is posting this piece of nonsense to begin with.
but you can walkaway.
File whatever you want 