Buying stocks on credit

Easy credit, a German credit provider

Lately I have seen a disturbing trend among some financial bloggers in Sweden, they take credit on their stocks to buy more stocks. To me this is a very clear no go and especially at moments when many stock markets are on all time highs.

Yes, even when the stock markets are on all time highs there will always be companies that are cheap but when the stock market drops by 30% then all the companies drop by 30%. That means that the stocks that you used to take the credit on will drop by 30% and so does the company that you bought with that credit.

The stock market is dangerous in the short run and wonderful in the long run. A credit is often the opposite... wonderful in the short run but devastating in the long run.

Back in 2009 in the middle of the crisis then I understand if people took a credit to buy stocks but I doubt that many people did that. I also doubt many banks would have offered credit on stocks so the only thing to use for the credit leverage would have been land, houses or apartments.
To risk your house for buying stocks in the middle of a crisis then you need an unusual way of thinking which, in my book, falls under the contrarian way of thinking.

Personally I am also sitting with debt on my shoulders which one can, and to a certain extent also should, say that I use as leverage for buying stocks for as long as I have those debts. I would love to pay them all off but due to the conditions of them as well as the reason for how they were created it makes little sense to pay them off directly and for that reason I will keep them as leverage for the time being.

I would never recommend anyone to take credits for buying stocks but if one must do so then please do it when the stock markets have crashed and not when it they are on an all time high as they are now!

As a small side note... Until I get a better feeling for the time needed for my economy studies I have decided to bring down the publication rate to one new publication every two days.

Analysis of IBM 2015

IBM, an American IT service company

Company: IBM

ISIN US4592001014 | WKN 851399

Business: An American IT service company. They are currently standing on five larger pillar: Global Technology Services (IT infrastructure and business process services), Global Business Services (Consulting and Application Management Services), Software (middleware and operating systems software), Service & Technology (business solutions requiring advanced computing power and storage capabilities) and Global Financing (invests in financing assets, leverages with debt and manages the associated risks).

Active: World wide making sales in over 170 countries.

P/E: 13.2

IBM annual report 2014

IBM, annual, report, 2014, front page

Grrrr... once again I have been waiting in the hope that a nicer report will drop out but by the look of things that is taking too long and in the meantime I get impatient. Based on the press release from last week I will now make the summary of the full year for IBM in 2014. The stock market was not so excited about the report and the share price dropped with around -3% on the day of release. Needless to say the share price is already back up again and then some...

Analysis of Dürr 2015

Dürr, a German automobile supplier

Company: Dürr

ISIN DE0005565204 | WKN 556520

Business: A German automobile supplier. They are divided into five divisions: Paint and Final Assembly Systems (paint shops and for assembly lines), Application Technology (paint, glue and sealing technologies), Measuring and Process Systems (balancing, testing and cleaning of machines), Clean Technology Systems (air purification and energy efficient systems) and Woodworking Machinery and Systems (machinery and plants for woodworking).

Active: They are currently active in 28 countries world wide so they have entered 5 new markets since the last analysis.

P/E: 19.0

Kernel operating report Q2 2015

Kernel, front page, operating report, Q2, 2015

Today Kernel arrived with their half year operating report. The share price directly dropped by almost -4% and I have to admit that I directly became annoyed when I started reading the report. What was then in it?

Analysis of Intel 2015

Intel, an American processor and chip producer

Company: Intel

ISIN US4581401001 | WKN 855681

Business: An American hardware producer (mainly processor). They are divided into six segments: PC Client Group (which is the processor part), Data Center Group (which is server, workstations and storage platforms), Internet of Things (platforms designed for embedded market segments), Mobile and Communications Group (which include tablet, smartphone etc.), Software and Services (mainly being McAfee) and the final one is All Other (which mainly has to do with non-volatile memory solutions).

Active: Products are sold world wide.

P/E: 15.4

Intel annual report 2014

Annual, report, Intel, 2014, front page

Intel arrived last week with their press release for the annual results. I read it and then I decided to wait until the fancy annual report arrived whcih i thought would come a couple of days later. Still it is not out and since I have with some matters little patience I decided to once again report based on the press release. The market started to hang their lips due to the report and upon release the share price dropped by around -4% but the very next day it was traded at the same price as before the report release.

School starts today

Lund University, Sweden

Today at 10h00 my economy lectures will start and I guess I must be online then to see what is going on. I still do not know how large the impact will be time wise for me but I will still try to keep up some kind of publications on the blog... the last time I reported concerning this matter you can read here in back to the school bench again.

At the very minimum I will publish the stocks I buy (& sell which I still have not done yet) and the monthly summary. Everything else will be based on available time.

I was chocked to discover how much the University study books costs! One book that they wanted me to buy costed around 220 €! Crazy! I looked around a little and managed to find some older versions and additionally they were used books so I got away with paying 82 € for all the four books that I needed. Lucky me!

I really find it an outrage that the professors arrive with a lecture plan using books that costs so much money. Back in the days 220 € was the equivalent of one months rent for my little 26 m2 apartment that I lived in and to my knowledge the students in Sweden have around 850 € per month to life on today (around 250€ is given and 600 € as a student loan). To then pay 400-500 € for some silly books is simply not ok.

Either way I hope that I will be able to use my classical approach of attending all lectures and making good lecture notes. I always bought the books but I never opened then when it came to study for the exams. I always read my notes a couple of times and that was enough to pass the exams with a minimum amount of effort and time consumed. Sure on also did not get the top grades but that has never been a target for me. To learn was always my interest and to learn by heart only to pass an excellent exam I could not care less about.

In Germany pupils usually get a school tüte. This school paper bag is made into a cone and contains all the material that the pupil needs for school plus a lot of sweets as motivation for the child. I guess no one will give me a tüte... :(