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Author: jacobdc76 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308883  
Subject: User Line of Credit for investing in this market Date: 8/21/2008 1:11 PM
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I was just awarded a $25,000 unsecured line of credit from my bank at 9.99% Do you think it's wise to use this LOC to add to my growing stock portfolio and take advantage of the market's depressed stock prices?

Thank you all for your feedback.
Jacob
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Author: LaraAmber Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277455 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 1:12 PM
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NO. Just in case you didn't hear me the first time. NO.

You don't borrow money to invest in the stock market.

Lara Amber

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277456 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 1:15 PM
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NO. Just in case you didn't hear me the first time. NO.

You don't borrow money to invest in the stock market.


It's his first ever post, and he's been a member of the Fool for two years. Do you think he might be a doppel?

Nancy

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277457 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 1:26 PM
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No, it isn't wise.

I also saw your other post and it isn't wise to use it to invest in real estate either. Good heavens.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277458 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 1:30 PM
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>> It's his first ever post, and he's been a member of the Fool for two years. Do you think he might be a doppel? <<

And given the nature of the question on the specific board it was asked, it's a bit like going to a forum for AA members and asking if they should start drinking.

#29

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277461 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 1:59 PM
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I was just awarded a $25,000 unsecured line of credit from my bank at 9.99% Do you think it's wise to use this LOC to add to my growing stock portfolio and take advantage of the market's depressed stock prices?

Do you have ~$535 a month free cash flow for 5 years that you would be willing to devote to paying back the loan no matter what the stocks do (go up, down or sideways)? Will devoting that $535/month to debt payback impinge on any other of your financial goals, like maxing out Roth or traditional IRAs, maxing out a 401(k)/403(b)/other employer retirement plan, saving for an emergency fund, a house, a car, etc. or paying back other debt?

If, and only if, you can answer the first question with an absolute yes, and the second question with an absolute no, should you even consider this possibility.

Then, you need to consider the question that if you have $535 free cash flow a month, why haven't you been investing that in the stock market? $535 a month for 60 months (the time that it would take you to pay back the loan at that payment amount) will give you a $32,100 investment, dollar cost averaged in, rather than a lump sum of $25,000. Dollar cost averaging will give you a chance to invest at a lower average price than dumping all of the money into the market at once if the market continues to go down. So unless you are able to forsee the absolute bottom of the market, and buy on that particular day, dollar cost averaging will likely get you a lower overall cost of entry.

AJ

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277462 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 1:59 PM
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It's his first ever post, and he's been a member of the Fool for two years. Do you think he might be a doppel?

Seems like a long time to wait to use a doppel.

PSU

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277463 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 2:01 PM
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Seems like a long time to wait to use a doppel.

Not necessarily. I've seen other doppels being kept in reserve,then being used a couple of years after being started. It seems to depend on how fast we out them.

Nancy

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277464 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 2:21 PM
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Not necessarily. I've seen other doppels being kept in reserve,then being used a couple of years after being started. It seems to depend on how fast we out them.

Insulation is good for houses and clothing in less temperate climes. It's not so good for large online communities where it's expected that there will be a constant influx of new members. The initial reception says a lot about who we are as a community. When we get so insular that new faces are met with suspicion right out of the gate, it's time to reexamine who we are, and what we profess. - TMFTwitty

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277465 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 2:31 PM
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Insulation is good for houses and clothing in less temperate climes. It's not so good for large online communities where it's expected that there will be a constant influx of new members. The initial reception says a lot about who we are as a community. When we get so insular that new faces are met with suspicion right out of the gate, it's time to reexamine who we are, and what we profess. - TMFTwitty

I gather you are saying that I should remove my post and myself while you tell the gentleman which stocks to purchase.

I will take the matter under advisement.

Nancy

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Author: lockmama One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277466 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 2:37 PM
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Do you think he might be a doppel?

What is a doppel?

Lockmama

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Author: kaellner Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277468 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 2:54 PM
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I was just awarded a $25,000 unsecured line of credit from my bank at 9.99% Do you think it's wise to use this LOC to add to my growing stock portfolio and take advantage of the market's depressed stock prices?

You're brave to post this on the penny-pinching board.

Will your scheme beat the 10% the money is going to cost you, plus any additional fees? And if it doesn't, will you comeback here and ask for advice about how to reduce your debt?

If you got it at 0%, you might have an extremely risky idea, but at 10%, it's just dumb.

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277469 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 3:00 PM
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I gather you are saying that I should remove my post and myself while you tell the gentleman which stocks to purchase.

I will take the matter under advisement.


I'm saying you are too quick to label someone a doppel. Consider the fact that this new poster's membership started in May 2006 when membership was not free. The boards did not become free again until July 2007. You are suggesting there are some people who have doppels in reserve during a time when it cost them to create them. You are so anxious to out anyone with "new" next to their name that you don't take into consideration some people may not be doppels. Nice way to greet them.

Maybe you should wait until the 10th post to make up your mind.

PSU

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Author: esbita Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277470 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 3:00 PM
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When we get so insular that new faces are met with suspicion right out of the gate, it's time to reexamine who we are, and what we profess. - TMFTwitty


Okay, so we can't apply a little common sense and call "troll"? After all, a board that relatively recently switched from paid membership to free membership is a great stomping ground for trolls and doppels/sockpuppets.

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277471 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 3:16 PM
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Okay, so we can't apply a little common sense and call "troll"? After all, a board that relatively recently switched from paid membership to free membership is a great stomping ground for trolls and doppels/sockpuppets.

As already mentioned, this "new" poster's membership started during the time of pay boards. Maybe he/she is rich and likes to throw away money.

PSU

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Author: TicoHombre Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277473 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 3:50 PM
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I liked the earlier question, "what's a doppel?"

TH

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Author: tanaquil Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277474 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 4:19 PM
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I liked the earlier question, "what's a doppel?"

Short for "doppelganger," or "double." On these boards, refers to a person who repeatedly switches identities when people get fed up with their previous trolling and p-box them.

I too think sometimes we're too quick on this board to suspect the activity of a troll (definition: someone who deliberately posts things that are intended to start a flamewar or otherwise provoke annoying, time-wasting discussion), but sometimes a troll is just a troll.

I dunno about this particular poster, but I think the first response in the thread pretty much summed up the correct advice in this situation.

"NO."

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Author: BklynBorn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277476 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 4:32 PM
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goodness gracious, what a bunch of fuddy-duddies! of course the answer is no, but can't a person have a bit of fun?

i love the OP's phrasing: "award"! "i was awarded"! - it sounds like such fun! and sounds like i won something, and the only question is how i should dispose of it.

my 20-year-old stepson said something like this recently - how he "has $1500 in his credit card". we immediately had a lengthy discussion, complete with diagrams and equations on envelopes and napkins.

BklynBorn

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Author: JGBFool Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277478 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 4:42 PM
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The initial reception says a lot about who we are as a community.

I think this board is extremely helpful for the most part-- the first time I posted here I was given good information in response to my question almost immediately.

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Author: martybl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277480 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 5:02 PM
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Do you think it's wise to use this LOC to add to my growing stock portfolio and take advantage of the market's depressed stock prices?

You can further increase your leverage, and your resulting gains, by opening a margin account with your broker, and using maximum margin.

martybl

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Author: legalwordwarrior Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277485 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 5:52 PM
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It's his first ever post, and he's been a member of the Fool for two years. Do you think he might be a doppel?

Either that or he's shy;0)

LWW

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277488 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/21/2008 7:45 PM
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PSUEngineer,

After thinking the matter over, I've decided to let my post stand. I do not believe that my post indicated that I was "insulating" myself from others. If I wanted to insulate myself from others I wouldn't be on the boards.

Not just the timing, but the very nature of the post seemed suspicious to me. His rate is 9.99? And most (which doesn't mean everyone, just more than 50%) of the investment boards aim for approximately (wiggle-waggle of hand, etc.) 10% earnings per year in investments, as an average. Some aim higher, but if you purchase good mutual funds and some healthy stocks, a reasonably conservative portfolio should average, over a period of time, 10% a year. Professionals such as kahuna aim a lot higher, but for an average invester, working over a period of time, 10% should serve. And he happens to have this wonderful offer, right now, at 9.99.

If he has actually been a paying member of the Fool for a year (followed by a free year) has this poster never lurked on boards? Why did he make a straight shot for two specific boards with his question?

I don't think I'm insulating myself by offering some skepticism. If you go back to my original post, I did not denounce him. I pointed out that he had been a Fool for two years, and, in his first post, asked a question which, as any regular reader of this board would know, would result in a cat fight.

There was a post over on the LBYM board the other day, regarding rain checks. And it was a first post from someone who had been a member of the Fool for a while. So yes, I think that some people have been using part of their entertainment budget to buy doppels. And when they're bored, they start an argument on a board. It's possible that the OP is one of these cases, it's possible he isn't.

I don't think there's anything in Twitty's message that is opposed to healthy scepticism. I didn't order the poster away, I didn't attack him, I didn't rant at him. I expressed some doubt regarding the validity of his message. If he can overcome my doubts, I'd be very happy to help him.

There is, I think, a lot of room between "insulating" ourselves, and swallowing every fish story, hook, line and sinker.

Nancy
who has a really, really, nice pipeline to sell you.

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Author: maracle Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277493 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/22/2008 1:32 AM
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As already mentioned, this "new" poster's membership started during the time of pay boards. Maybe he/she is rich and likes to throw away money.

Not sure about this, but don't trial accounts that were created for free back then stick around? And were then valid once the boards went free?

I agree that the OP isn't necessarily a doppel or troll. It is certainly possible, but I think you're right that people should give them a few posts before making a decision.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277534 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/22/2008 4:23 PM
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>> No, stock prices are NOT depressed until the Market Multiple is about six or seven. <<

Market multiple is not a terribly useful indicator of market valuation without putting other interest rates in context.

A market multiple of 12 (i.e. an "earnings yield" of 8.33%) may well be attractively valued when the Treasury yield is 4%. But in a high interest rate environment where Treasuries are safely earning 12%, even a P/E of nine (i.e. an 11.1% earnings yield) is richly valued relative to the available "safe" yield.

Having said that, putting your home at risk to invest in the market is a terrible idea.

#29

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277541 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/22/2008 9:29 PM
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If he has actually been a paying member of the Fool for a year (followed by a free year) has this poster never lurked on boards? Why did he make a straight shot for two specific boards with his question?

IIRC, either Twitty or Bogey has mentioned in the past that only a small percentage of Fools ever post on the boards. On more than one occasion, I have seen posters make their first post many years after registering for the TMF. It could be that this poster first started here by subscribing to a newsletter. Maybe he thought he could purchase a few Hidden Gems with that 10% loan.

Why did he post here first? Maybe because this is the Credit Cards and Consumer Debt board. Many people think this is just the credit card board but it covers other types of consumer debt. So this poster committed a huge crime by posting on-topic. Why did he post on the "Ask a Foolish Question" board? Maybe it was due to being called a doppel. If you check the timelime, his second post was after your post.

I don't think I'm insulating myself by offering some skepticism. If you go back to my original post, I did not denounce him. I pointed out that he had been a Fool for two years, and, in his first post, asked a question which, as any regular reader of this board would know, would result in a cat fight.

As mentioned already, it has been said only a small percentage read the boards. Unless you are a mindreader, you cannot say he would know it would cause a catfight. He asked a legitimate question. Should I use consumer debt to buy stocks?

This is also the Consumer Debt board. It is not exclusively about credit cards.

As for denouncing him, how would you like to be met with skepticism when you walk into a room for the first time.

There was a post over on the LBYM board the other day, regarding rain checks. And it was a first post from someone who had been a member of the Fool for a while. So yes, I think that some people have been using part of their entertainment budget to buy doppels. And when they're bored, they start an argument on a board. It's possible that the OP is one of these cases, it's possible he isn't.

That post could be met with more skepticism than the original post in this thread. If the OP is a doppel, it is the Lamest.Doppel.Ever.

If I were to create a doppel, I would create a family with a multiple six figure income deeply in debt. I would be close to retirement, thinking of building a big house and spend lots of money on show dogs. Fortunately for someone in a similar situation, she was given a chance to interact with the members of the board to show that she wasn't a doppel.

I don't think there's anything in Twitty's message that is opposed to healthy scepticism. I didn't order the poster away, I didn't attack him, I didn't rant at him. I expressed some doubt regarding the validity of his message. If he can overcome my doubts, I'd be very happy to help him.

Maybe the guy is very shy and it took him some courage to post his first message after two years. Not everyone is as tough as determinedmom when the validity of their message is questioned.

There is, I think, a lot of room between "insulating" ourselves, and swallowing every fish story, hook, line and sinker.

IMHO, new posters should be allowed to make more than one post before questioning their existence.

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Author: InconclusiveFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277549 of 308883
Subject: Re: User Line of Credit for investing in this ma Date: 8/23/2008 2:55 PM
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"Do you think he might be a doppel?"

And that matters why?

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