Posted by Tim Stobbs on July 10, 2008
Was it me? I got back to work and the stock market starts taking a huge dive down. I swear the gods are teasing me here. I’m hard pressed to have much cash and there is all this potential on dirt cheap pricing of stocks. I want to be able to buy a few things!
So I’ve been thinking about my little leverage experiment. I’m actually getting some what used to the idea of borrowing money to make money. So should I just expand it for the short term and pick up some deals? My monthly cash flow would be the same as I’m not up to my minimum payment each month in interest. Then I can just pay it back as time permits. The other side of it is am I falling into a trap of buying stock on credit and not keeping enough savings for this purpose.
What I need here is some rules to direct myself. I rather like the idea of having no more than 10% of my investing net worth as leverage. So that would mean I can borrow up to $6000 and still be under that target currently. I’m so far at just under $3000 being leveraged right now.
This is really the problem with investing isn’t it? We have all these great ideas, but emotion makes decisions so difficult some days. So I’m thinking of expanding the leverage by perhaps $2000 for now. That way I can pick up one deal and then sit on my hands happy that I did get something during this fall of the markets.