Interesting article. Sounds like a lot of work to me to search out all those stocks and I sure don't get his "I yearn for a 50% market crash". I suppose that since he is getting so much in dividends each month that he sees this as a good opportunity to buy more stock at a much cheaper price. But what about his other holdings?
So I see 2 issues with what he is doing.
1. Because of the high dividend rate, this is going to trigger a lot more taxes than a normal B&H portfolio. I used to avoid this issue by holding mutal funds.
2. If we get a 50% market crash and he is leveraged 1.6, that means he would be down 80%. This of course assumes the beta is 1, so maybe he will have a little lower beta, but riding the market down 70-75% to me is nuts.
But the one really good take away from all this discussion about WB over the last several months for me is this: WB who is a very conservative investor seems to be very comfortable investing 1.6 to 1. I would have never thought that in a million years. So in the last few months I have started to take my leverage up a bit. In my test account, which is a medium size account, I am running 1.5. But for sure I will not ride a 50% correction.
So all this reading and thinking was worth it just bring up the investment level issue.
A good read. Thanks.
Trade the Charts and not the Heart - Expect the trend to
continue until it doesn't - Realtime is the real deal
