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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated
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To: Knighty Tin who wrote (174)10/30/2003 10:53:46 AM
From: Jurgis Bekepuris  Read Replies (1) of 2955
 
>When rates are low, that's when you should buy money
> markets and pay off debt.

Can you explain this one more time? I assume the opposite: you should get as much debt as possible (comfortable) when the rates are low, since when the rates go up the low-rate debt you took becomes an asset.

Looking at it other way: if you get $10M debt now at, let's say, 5% yearly and stash the $10M in interest paying account, when the rates go up to, let's say, 10% you are earning more uin your account than what you need to pay in interest.

I think you are right if you think about variable rate debt, but I think totally opposite applies if one thinks about fixed-rate debt.

Jurgis - what am I missing?
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