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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives
SPY 671.910.0%Nov 14 4:00 PM EST
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POKERSAM
To: GROUND ZERO™ who wrote (70401)4/22/2015 12:58:28 PM
From: Kirk ©1 Recommendation  Read Replies (1) of 218852
 
It isn't that ominous or mysterious or "completely manipulated."
The FED for the past 6 years has been feeding this market with low margin rates... also, companies are also buying back their own stocks to keep the price from falling... it's completely manipulated.
I politely disagree.

What would you do?
.....If you were on the hook for paying shareholders 2 to 5% dividends while you had cash in Short Term US Treasuries earning 0.02%?

Do you think it is stupid to pay down an expensive mortgage if you have cash earning 0.02%?

I can see having a mortgage at 3.25% while earning maybe 1% in an FDIC savings account if the mortgage is looked at as a massive inflation hedge for only 2% (after taxes) or so cost... for maybe 10 or 20% of your net worth.. (I have about 5% -10% of net worth in such a mortgage hedge) but I can also make a good argument to use the cash to buy down the mortgage if you have sufficient liquidity...

It is no different than refinancing a $1M, 4% mortgage at 3% and using your cash to either pay down the
mortgage or refinance if the cash is sitting overseas and you don't want to pay 35% Fed tax to use it.

GE pays a 3.4% dividend. Why not use cash to reduce the payout? Certainly the bozos in government aren't doing anything to encourage growth so the wise thing is to enhance company balance sheets when rates are low... which is exactly what the Fed is encouraging everyone to do.

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