Can Stocks Pay Your Mortgage?
Is this the right choice for homeowners?
- Duration 5:45
- Date Sep 15, 2011
Is this the right choice for homeowners?
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Parents it's six degrees in thestreet.com he's with a straight now senior -- is a marketwatch.com.
You -- with the street we're you not.
I was I want yes posed many many years ago many years ago yeah me and Jim Cramer apparently were three some of the web sites and we were involved and -- And widespread conspiracy against apple.
It was a major -- because I mentioned -- once in my entire life and that was actually work for the Boston Herald please do I think it was vital of the thing.
My my what most people don't know is that Jim was never around I was in street for many years and then you came in afterwards and we never saw -- -- so any.
Well wasn't I wasn't even in the New York office in fact I was a very happy probably the best memory I have the street one -- members.
Was the fact that I never once signed up for mine.
For the corporate email system so I have no idea.
How many people sent me angry.
We I guess it was really they never ever received anymore I left.
This is older than they were gonna shut -- -- -- guys and I never I next bubble popped up until it.
So -- emails grossly overrated but.
We're very -- -- Boston mass.
What we're doing right there are -- you -- -- does your inbox.
You know more from Boston are it will good for I ask it gets so bad here.
I so let's talk about your story can stocks pay your mortgage in this notion that I get to go home equity loan mountain gold buys stocks is really because the markets on sale.
Exhibit I think get the -- -- -- not.
-- well listen I'm doing hair is.
About that actually take out a home equity line and buying stocks is.
You won't -- recap sort of level what I was doing was illustrating the fact that at this point.
In -- -- the cost.
Of a mortgage is below the dividend -- little of a stock's been implied side of the ball underage -- too low.
Or are stocks are are are are cheap basically I mean the truth is you -- 4% percent on a thirty year mortgage -- I can but not -- that either it's tax deductible so if you're all in are a eight the middle class upper middle class tax -- you know it's effectively everything costing it 3%.
You know look at all the stocks -- -- through all the blue chip stocks paying three and a half percent or better -- -- but 15% tax rate on the on the stock.
I mean the -- says you know there are tons of blue chip stocks out -- that you know I can argue that they are.
You know so cheap that -- of 1982.
And this is a long way bet but they are certainly when you compare them to.
The alternatives and you compare them to the cost to capital.
It's hard to argue that -- expected.
I mean you look at up you know Procter & Gamble or J&J or in our -- ago or in all of these guys in a Coke and Pepsi and wall -- I'm in He literally stocks and you look at in a little piece.
Pretty high dividend yields especially when you compare to the interest rate environment.
And and it's hard to -- that bearish I don't care about this is your stop here this got a vote the market I did an article last week.
About you know how the market vibration just searched the last couple of years for our stock market headlines based around Europe and have been the number of times stock markets rise because their own you know hopes of Europe bailout -- rockets fall on fears about -- I mean is basically would we keep going through the same movie it's like Groundhog Day every day we wake up.
And it's like are in European affairs and then -- King -- If they actually solves the problem that will be a first I don't think they have I don't.
But you know it's hard to argue in this environment they're blue chip stocks are about investment maybe there.
The least bad investment out there but -- -- cash.
In -- you're getting in -- shafted.
Bonds I mean they scamming I've been in are worried about them for too long and to be honest you know David Rosenberg has been bullish of bonds.
Has been right and you know I would -- -- SG securities that look.
-- we're just basically Japan and throughout the ninety's everyone and in Japan was saying no that the Japanese bond yields too low and it -- kept going lower lower right ever happened here but I don't I don't believe that I'm I'm very skeptical.
If I had to hide somewhere it'll be in blue chip stocks and as I point out my article.
Blue chips a lot of blue -- -- so good now so well now that -- -- the yield here every take the yields.
And you deduct 15% for tax.
You're still basically in you're reading a mortgage.
Yes and that I'm totally with you the problem unfortunately though is that people can't.
They can't get access to this money wasn't right or so since we're stuck on so many levels at.
You know although everybody says so many people are sitting on -- I don't know -- people Thursday as it is hedge funds and money managers that are sitting on cash.
How much cash they haven't had -- cash sounds like 5% I mean it's.
It looks like a lot to go back to the nineties when people -- you know.
Before the big equity bubble it was normal to happen at 10% or 8% in cash it's obviously -- -- And -- and it actually experiencing gold -- -- that no institution seems to room whatsoever.
You know I think.
I did literature gun clubs and a lot of people who are just have no money end of the rivals in debt but I think the people who have money and holding quite a lot of cash and they don't know what to do that but I took -- head.
Once -- there are some money managers and their clients -- basically.
There's -- I'm just holding all this money in cash I don't know what to do on that they're terrified of the stock market.
Yeah terrify the bond market.
Nothing else you know pace than anything I mean is -- to get nothing LCDs.