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To: nihil who wrote (98199)	2/4/2000 7:24:00 AM
From: Road Walker	Respond to of 186894

nihil, RE: "Would you margin stocks like QCOM and JDSU that increase by approximately 10 - 20 X a year at 8.5%." Not me (too much risk), but I get your point, others would. RE: "Would you margin 30 year bonds yielding 6% at 8.5%." Many bond investors buy the bonds for face value appreciation. Those that bought bonds on margin last week are doing very well, probably better than those that bought JDSU, maybe not better than those that bought QCOM. At this point in time, folks are very risk tolerant. That can change quickly, and if it does, a dwindling supply of 30 year T bills will look like a very good bet. But I agree about creating money, I wonder how much "money" the stock market boom of the last 8-9 years has created? Staggering. John

To: nihil who wrote (98199)	2/4/2000 8:13:00 AM
From: GVTucker	Read Replies (1) \| Respond to of 186894

nihil, RE: Would you margin stocks like QCOM and JDSU that increase by approximately 10 - 20 X a year at 8.5%. Ex ante that is not a question easily answered. Would you margin 30 year bonds yielding 6% at 8.5%. The answer here is not so simple either. The biggest users of margin debt (hedge funds) are margining 30 year bonds at a 10 to 1 debt/equity ratio right now. The reason is that their borrowing costs are not close to 8.5%. Instead, people out there margining long bonds are borrowing their money in yen, and thus are paying rates closer to 3-4%, generating what they call 'free money'. Some people who are a little more risk averse are borrowing in euros, still paying a lot less than the 30 yr yield of 6%. The leverage in the hedge fund community continues to frighten me; a lot of people didn't learn much from the LTCM debacle.