Hank Speak

I hope the only lesson learned here is not, if you are going to fail, make sure you fail so big we can't afford to have you fail.

Debt should not be used to increase your return on equity numbers, debt is bad, debt is dangerous, debt is to be avoided, always has been, always will be.

I find it odd that companies like Microsoft, that have no debt, grow revenue, grow net income, each and every quarter don't see there stock go up.

While their stock went no where for the last 5 years, leveraged home builders and investment banks saw there stock go through the roof.

For a while.

So now that people are a little "concerned" about their investment holdings a check on the amount of debt a company has may be an idea. I'm an old banker so it's always the first thing I look at.

One reason to check this now is the cost of borrowing is going up, way up, for everyone.

But the best reason to check the amount of debt on the balance sheet is, the last time I checked you can't go bankrupt if you don't have any debt.

Public companies have access to public equity, they don't really need alot of debt. They have taken it on over the past 10 years because it was cheap and they could boost their return on equity number with it.

It looks like those days are over.

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