05-06-2019, 05:30 PM
(05-06-2019, 03:56 PM)dreamybear Wrote: [ -> ]If my hypothesis is somewhat close, I think to be able to come out with an idea like that is very impressive & refreshing - it is more credible than those who teach you to analyse stocks and tell you that you can be financially independent thru' investing. There wld of course be risks since it's using leverage, unexpected events like govt policy changes, etc but I think young working adults may afford to take higher risks esp if they want to F.I.R.E.. Also, I think the trainer had backtested his strategies to factor in recessions, etc.
I am not trying to de-credit the guy but the idea is not new. This idea is akin to the age old method of "borrowing short term to lend long term and then earning the differential".
All banks do that, until non bank entities like GE Capital started to imitate them to earn big money. And the the old adage - "what the wise man does in the beginning, the fool does in the end" applies again - We all know what happened in GFC2008 when the money markets simply froze and GE Capital couldn't roll over their commercial paper.
Using banks' leverage capabilities is simply akin to borrowing short term - This is because they can simply take it back or request you for additional funds to top up your margin. While earning the returns - dividend payout is long term because even though you know when they will pay out dividends, you can't actually dictate when and how much they do.
Listening to survivors like Temperament is probably boring But if one understands survivorship bias, then it would probably be useful to take heed of survivors.