Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: James Clarke who wrote (15666)	10/18/2002 2:21:23 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78516

Jim Clarke, thanks for those thoughts. There is a lot to be said for the mind set of managers who disdain debt vs. those managers who pile on large or massive amounts. That mind set difference rather than the debt itself, might, as you suggest, be a very good reason for choosing no or low debt companies. Interest rates are low; if a company could borrow and if they could earn above their cost of capital, maybe they should borrow. On the one hand, the low interest rate suggests a lower hurdle rate. OTOH, trying to make increased sales and more profits in this economy is darn difficult. Borrowing presupposes only a guess that the company will have those favorable earnings on those borrowings. I wonder. Perhaps I would be doing much better if I excluded high debt companies from my consideration. They are often troubled companies, but value stocks thereby. Ever diversified, the result for me is that I likely have more bankrupt companies in my portfolio than any three other people here. (And they weren't bk when I bought them.) Reason for almost all the bankruptcies: too much hubris. (maybe by the companies, maybe (sigh) by me as an investor). Corporate hubris is often exhibited and exacerbated by too much debt. Fwiw, here are some companies on my watch list with very little debt. Sorry I missed so many --- CINF, CMH (Drat. Again I missed it.), couple of clothing companies and a couple of other stocks mentioned here. Sometimes it takes me too long to make a decision. Perhaps there's still time as these companies continue to move up from recent lows. (OTOH, maybe they'll retest.) I have NSI, a small company with zero debt but it has some (if that is a word to use) asbestos exposure. I am tempted to add just a little more at current low. finance.yahoo.com Paul Senior