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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Zeev Hed who wrote (49516)	5/7/2000 8:29:00 AM
From: Joan Osland Graffius	Read Replies (2) of 99985

Zeev, Re: IBM and debt. I guess I am old fashion, but IMO debt should be used for investing in the future of a company and not for short term stock value gains, i.e. buying back shares. Now buying back company shares is ok IMO if there is no debt to pay off and if there are no investments with free cash flow that can be made to enhance the future success of a company. IBM's balance sheet is showing me that there is deterioration of stock holders equity, and I do not want to own a company where the value of the asset is deteriorating. But, if other folks think that is ok, go for it. <g> There is one caveat here where debt can be good for a business if the government lets you write off the debt as well as allows you to depreciate the asset you bought with the debt, and the asset will be more valuable when it is depreciated to 0. i.e. real-estate. Even here the capital gains from the debt enhanced investment must be long term to make sense at my bottom line. Joan

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