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Politics : Ask Michael Burke

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To: Ilaine who wrote (61255)	6/2/1999 12:31:00 PM
From: Freedom Fighter	Read Replies (1) of 132070

CB, Most people who are on margin right now do not understand the risk they are taking. They have limited investment experience. Those that are encouraging others to buy on margin shouldn't be giving investment advice. Even with reasonably positive assumptions about the future it's easy to demonstrate that stocks are presently discounting a rate of return that is LESS than the cost of borrowing on margin (for most). So it's already silly to be doing so. And you still have to pay capital gains taxes. Margin interest is not deductible against those gains. Only in very rare cases does it make sense in this environment. When you factor in that stocks are trading at around 50% above all time historical highs, being on margin is reckless beyond my comprehension. I feel less sorry for margin investors than I do for a guy who lost his job via downsizing and can't make his mortgage payments. Wayne

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