Jim,
Interesting concept, but considering the following:
$500M is 'chump change' to DELL. I think that DELL is doing it for a different reason, maybe to 'get on the radar' screen of those who like to own 'debt' instruments, and therefore 'tap' another source of investors.
As for the 'mortgage' approach, I wrestle with that all of the time, as whether to 'stay invested' or accelerate the 'mortgage payoff'. So far, the battle is mostly internal, since the 'cashing in' of an investment that is appreciating at this rate to retire a debt that is currently at 8.75% annual makes little sense and even less 'cents'! Even if DELL goes up only 50% (currently much higher than that now), I have to be making 41.25% on somebody else's money! Is this a bad thing? Actually the banks don't seem to mind as they have the 'real property' while I have the 'paper gains(losses)' and no real property. I suppose that the true test will be to 'sell' some assets to retire the 'mortgage' at the absolute top of the 'market'. If properly timed, I will get out of 'growth stocks' and get into 'bonds' as the market starts down, and in a dropping market, 'bonds' are the money makers. (So I have been informed!)
As for investment policies, any investment advisor will recommend that a person be 'diversified' into several areas. IMHO, this is done so that if the market 'crunches' and for some reason the 'investor' decides that 'his advisor' is at fault for 'putting him' into only one stock, and therefore is 'responsible', decided to 'sue' his advisor. In a 'court', the 'advisor' is liable to 'loose' big time! But for the 'investor' making his own decisions, if they find a stock that has some 'pretty good' performance, both now and historically, they can 'bet it all' because you can't 'sue' yourself!
If I were an investor, depending on an 'advisor' and with the current exposure that DELL is getting, I would ask my advisor if they had me in DELL. If the answer was 'affirmative', regardless of the size of the position, I would feel that at least my advisor was performing 'due diligence'. If the answer was in the 'negative', I would question them specifically, and then question 'myself' about my selection of the 'advisor'! JMHO
Regards,
Ken |
