Re: Taking out a prosper loan to buy stocks
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This is the stupidest idea I've ever heard on these boards.
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Would you also say this if he changed "Stock market" to reinvest at higher interest rates on Prosper?
Just curious, if it is a stock market risk aversion or an "any vehicle" risk aversion.
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I am going to answer for Gild. Of course not. If he was borrowing at 12% to lend at 18% we would call it arbitrage and I would consider it to be pretty clever.
The issue isn't risk aversion per se, it is the almost willful throwing away of money. Let's imagine an alternate universe where the historical return of the type of equity he is investing in was 20%. So he borrows at 12% and invests in an index fund. That would carry risk, but it would also be +EV. This is just a bad gamble and a bad risk
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