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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (10619)	10/30/2002 10:59:09 PM
From: X Y Zebra	Read Replies (1) \| Respond to of 57110

Using debt in appreciating assts is indeed very beneficial. However, (particularly in times like today, or soon to come), There may be assets that will depreciate little (if at all). Still, there is a case to still use debt (within reason), as the debt used gives you the power of paying cash for it at depressed price levels, yet if one has the skill or desire to work, in which that skill is what creates the cash flow to cover the debt contracted, then... you have the necessary staying power so... Once the recession (or deflation) passes, then you have created a very strong base under which the asset itself will begin to appreciate (on top of whatever operational skill was being used to cover debt service) On the other hand, as you indicate... Consumer loans can become a big problem since the debt does not originate any income, on the contrary it depletes the same via the debt service... and of course, the worst is when... debt is used simply to pay peter (borrowing from pancho) So which kind of debt is rising faster now ?