Leverage is a two-edged sword. The other side of it is that you can goose the profits when things are going right. If you can borrow money for 4%, and make 8%, and you have 50% debt and 50% equity, then the equity holders will make 12% on their capital. Of course, if the business only breaks even, then they’ll lose 4%.
That’s why I advise investors to read balance sheets and statements of cash flow very carefully.
Of course. Cash flow is king. And that’s why the stock market is an investment. Those looking at investing in commodities can buy derivatives.
Purchasing commodities outright is the opposite of cash flow. It’s a cash store—taking the goods off the market.
While the price will fluctuate, actual values generally mirror the economy. In cases of financial uncertainly, hard goods are often better stores than market instruments.
I am not a bug of any sort, but there is no reason not to hold some hard, untraceable assets—especially when inflation is so much higher than interest rates.