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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: substancep who wrote (43930)	6/26/2001 9:56:02 AM
From: Stock Farmer	Respond to of 54805

How is this [purchsae equity using loan] beneficial to DCA at precise intervals with surplus cash? I was comparing one deduction of cash flow from paycheck from another. Straight "dollars disappear from my pocket" comparison. In the DCA case where the equity is fixed, you are essentially paying market price of a (hopefully) inflating asset. Most of the time, markets being mostly efficient, you are paying a "fair" price. In the loan case where you purchase the equity in advance, and choosing it based on being temporarily depressed in price (remember, you are choosing from a list of "good" companies, and there are many of these to choose from). Mine is a bargain hunter's strategy. Based on the fact that I ALLOCATE the amount. That is, deciding WHICH Gorilla gets my dollars on Tuesday. In both cases one experiences a time cost of money. In the case of the loan it is apparent. If your ability to select good companies is even average with respect to the market (over the long term) then the after-tax cost of the loan is more than made up for by the differential appreciation in the equity. John.