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You have $100M of stock in Berkshire Hathaway. You use use that as collateral to borrow $11M. You use $1M of the loan to pay expenses (including the interest
by drdec 5y ago
You have $100M of stock in Berkshire Hathaway. You use use that as collateral to borrow $11M. You use $1M of the loan to pay expenses (including the interest on the loan). You invest the other $10M in Amazon.
A year later you have $11M in Amazon stock and $110M in Berkshire Hathaway. You borrow against the Amazon stock and use that to pay off the first loan. Lather, rinse, repeat.
The bankers are always happy. Why would they ever foreclose on you?
- dnissley 5y agoBecause stocks don't always go up
- 34679 5y agoWhen they go down to any significant degree, Congress steps in and socializes the losses.
- koheripbal 5y agoIndividual stocks never go down? Is this a serious comment?