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This definitely warrants criticism, but these comments are way over the top. If you want to use margin as an instrument for whatever you're doing, that's fine.

by lxe 3y ago

This definitely warrants criticism, but these comments are way over the top. If you want to use margin as an instrument for whatever you're doing, that's fine. It's not a terrible advice. There's a lot of useful stuff you can do with these sort of loans, just like you can with borrowing against your 401k, using things like HELOCs and even bouncing around credit card debt using balance transfers. Think of debt as a power tool - learn how to use it, rely on common sense it, use plenty of PPE, and don't get unnecessarily hurt.

esalman 3y ago
The comments seem way over the top because we're in a bull market. Things would be quite different if it was a 2008 crash situation. That's all the comments are saying.
hnfong 3y ago
> rely on common sense What does that mean here? > If you want to use margin as an instrument for whatever you're doing, that's fine. It's not a terrible advice. The author is effectively buying GOOG on a margin through various cute tricks. That's all to it. With the volatility of GOOG and its current P/E I personally wouldn't do it, but I could be wrong about this, and I don't think anyone who buys GOOG on margin is necessarily stupid. But the parts about "consumptions smoothing", the assumptions about the stock market returning 7-9%, and the confidence of being able to pay the debt back in a couple months of work is just self-rationalization bullshit. Not because they're necessarily wrong, but they aren't even remotely connected to the fact that he's just very simply buying GOOG on margin. The only real concern about buying stocks on margin is what happens when the price of your assets drop and you get a "margin call" (not in the usual form since he borrowed money in various ways). When you get a margin call, it doesn't matter whether you think you can earn more money in the future or whether stocks have outperformed interest rates by 3% in the past couple decades, or whether you've been living frugally or not. I totally get it that the author is just some random dude figuring out life, and I shouldn't be too harsh on him (the person). But the "advice" is honestly terrible, the worry is not that he might ruin his life (as others have mentioned, he's probably privileged enough to be fine), but the audience here on HN might actually be misled and the advice might end up ruining more lives..

by lxe 3y ago

esalman 3y ago

The comments seem way over the top because we're in a bull market. Things would be quite different if it was a 2008 crash situation. That's all the comments are saying.

hnfong 3y ago

> rely on common sense What does that mean here? > If you want to use margin as an instrument for whatever you're doing, that's fine. It's not a terrible advice. The author is effectively buying GOOG on a margin through various cute tricks. That's all to it. With the volatility of GOOG and its current P/E I personally wouldn't do it, but I could be wrong about this, and I don't think anyone who buys GOOG on margin is necessarily stupid. But the parts about "consumptions smoothing", the assumptions about the stock market returning 7-9%, and the confidence of being able to pay the debt back in a couple months of work is just self-rationalization bullshit. Not because they're necessarily wrong, but they aren't even remotely connected to the fact that he's just very simply buying GOOG on margin. The only real concern about buying stocks on margin is what happens when the price of your assets drop and you get a "margin call" (not in the usual form since he borrowed money in various ways). When you get a margin call, it doesn't matter whether you think you can earn more money in the future or whether stocks have outperformed interest rates by 3% in the past couple decades, or whether you've been living frugally or not. I totally get it that the author is just some random dude figuring out life, and I shouldn't be too harsh on him (the person). But the "advice" is honestly terrible, the worry is not that he might ruin his life (as others have mentioned, he's probably privileged enough to be fine), but the audience here on HN might actually be misled and the advice might end up ruining more lives..