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First is, that bankers and mortgage lenders are very smart people. They don't do dumb things. THey also tend to make a lot of money.

Now, if they are willing to loan you money, at 8%, and you figure your are going to make 12%/yr, and that the market is going to return that year after year, then:

Why would any banker in the first place loan you money?

Because it's virtually guaranteed profit, and predictable. The banker borrows the money from the Fed or from people's passbook accounts at low rates, and lends it at higher rates. If you don't pay your mortgage, they take your house away. The stock market may return more on average, but it's not predictable. Sometimes you'll lose money for two years in a row--like now!

Many mutual fund managers are at the mercy of the quarterly figures; if they don't beat their benchmarks each quarter, people will pour money into funds that do. This can lead to shortsighted decisions that are bad in the long run. However, an individual with a long term focus can ignore the short term gyrations. The banker is in a similar bind to the fund manager. He needs predictable returns, not huge returns some years and losses in others. This is because of banking regulations, people's expections for their bank/S&L/CU, and responsibility to any trusts they administer.

Finally, the banker makes lots of money using other people's assets. Individuals make their money using their own money (investments) and time (work), with very little leverage. Your home is one of the few leverage vehicles available. There are margin loans for stocks, but you don't always decide when to sell--if the stock drops, you have to come up with money to cover the margin call, or else the stock can be sold even if you don't want to do so. (And because the stock dropped, it's like being forced to "sell low.")
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