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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: the Druid who wrote (5626)	3/27/1998 10:08:00 AM
From: clochard	Respond to of 18691

I know what to say: call in the government watchdogs and stop this! Or encourage it so the crash happens sooner!

To: the Druid who wrote (5626)	3/27/1998 10:09:00 AM
From: Franco Battista	Respond to of 18691

Yes, they prefer to keep their cash intact in their bank accounts (in case they may need the money in the short term) and borrow to invest in mutual funds. Their thinking is that in the long run stocks make about 10% average return, so if they only pay 6.5% in interest on the loan then they are making a net profit of 3.5% a year. Hey, it sounds like a no-brainer! I'm calling my bank rep immediately! NOT!

To: the Druid who wrote (5626)	3/27/1998 10:24:00 AM
From: Mr Logic	Read Replies (1) \| Respond to of 18691

Druid this is not at all uncommon. I have had discussions with people taking second mortgages, bank loans to put into the market. And you know what? They got it right! Maybe the savvy ones will pull out soon.

To: the Druid who wrote (5626)	3/27/1998 11:02:00 AM
From: Ploni	Read Replies (2) \| Respond to of 18691

Another anecdote: a couple of Sundays ago I was watching a local business show on t.v., and someone called in to ask the host if he should borrow money on his credit cards, and use the 20-day float to make money in the market. The t.v. guy advised against it, because he didn't think the guy could necessarily earn a good return in a short-period of time. Of course, if the guy on t.v. was smarter, he would have pointed out that the credit card float is only if you buy a product or service. If you get a cash advance, they immediately start charging their 25% interest, compounded hourly, or whatever it is. But this kind of anecdote demonstrates that many novices have seen that the market just keeps going up, and they assume it always will.