Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

Joe, you know how much I "love" these lengthy dissertations, I can always finds in the doomsday sayers lengthy verbiage a single sentence that negates the whole hollow argument, in this case it is: "The ratio of long-term debt to total liabilities now stands at 68.2%, the highest level since 1959, "

Well after a small relapse into 1962 (the Dow bottomed around 524 or so, 10% under early 1959 values), guess what, the Dow roared ahead to peak around 1000 in early 1966, despite the "dire" imbalance". It is really quite simple, if interest rates are so low that you have to pay only 1/3 of your internal rate of return on assets employed in the business, you want to increase debt exposure. That is what is called making money on OPM. Unless you see a very rapid increase of rates (and all those no interest convertible bonds have no interest charge to them at all, if you can get them, it is stupid not to get some...).

Zeev