You wouldn't start a company with little/no cash investment from you and the money coming from other sources? In Buffett's case, he had sufficient numbers of people who believed in him that he didn't have to put his own money in.

You just do not understand. That is fine, I guess. You really don't get it. As someone mentioned in either this, or another similar thread, let's assume the following:

Buffett at the time of the house purchase, or anyone today, inherits a house that they own free and clear.

Now, in your reckless world that totally glosses over the challenges and bad luck that many encounter in life and investments, it would be acceptable to have the person who inherited the house take a mortgage against the house and invest the proceeds, putting his family at risk in the process.

This is clear cut stuff, yet you are blinded by the plug and play method that you use, which makes assumptions that cannot be made in the real world, and conveniently overlooks the real life and financial results that occur when those assumptions inevitably don't pan out.

Anyone who would advise someone who inherited a house to take a loan against it and invest the proceeds, with the stated reasoning being that you can make more on the investments than the cost of the mortgage, is a reckless fool who I am sure has made horrific financial decisions in the past that they never admit to here. If your theory had any weight at all, the mortgage companies should not offer mortgages, they should invest in the market instead. Pitiful.

You are the one missing the point. Badly. Stop posting.

lol I randomly checked the other thread bumped in BFI since I had a post in it. I check the post and coincidentally see it was in response to you:

http://forumserver.twoplustwo.com/sh...8&postcount=95

Stop blindly obsessing over Buffet's success and think for yourself.

Please show me a reference which states that he paid CASH for his house.

You are making this assumption based on the fact that he BOUGHT a house?

Show me where it states that he paid all cash for his home at a time when interest rates were comparable to today.

No. I wouldn't. I have had a number of opportunities to do so and turned them all down. I did accepted money from people once but I had a lot of skin in the game as well. That worked out well but I would never do it again. I would feel terrible if something happened to other people's money who trusted me. If I lost it I would feel like it was my **** up and probably pay it back. This pretty much defeats the point of using other people's money. The difference between the Buffett fan boy and myself though is that I fully realize this is my own issues and that what I'm engaging in is a sub-optimal course of action.

True but a mortgage is not excessive leverage.

What this paragraph tells me is that you are poor and you have near zero investment experience. That is the only way anyone could actually believe this.

What plug and play method?

What assumptions that cannot be made in the real world?

For some reason I get the impression that you think investing is taking all your money and picking red or black.

I have no issues admitting that some investments had bad results. I can't really think of any that I'd described as horrific but there are some that didn't work out and I lost money. Anyone who claims otherwise is almost certainly lying. The important thing though is that the successful ventures have made considerably more than the losing ones.

Your posting makes it very clear that you have no experience investing. All your posts are premised on the incorrect assumption that someone who invests can just wake up the next day and have it all gone. That is not a possibility. Short of a zombie apocalypse someone who has a clue will be fine.

Lastly, your paranoid fear of taking care of family by having a residence free and clear ignores the low but real chance of illness / disability. If I walk out the door and a bus hits me because I have some income paying investments I'll still make considerably more income than the average person. I can be in a coma and money is still coming into the household. That wouldn't be true if I tied up capital buying a residence for cash.

All of this discussion is ignoring the question of should you even own. I rent and buying would be a huge financial mistake but trying to explain why renting is better financially is something I'm pretty sure I'd never accomplish.

Can't believe people are still arguing with him when he posts stuff like that. You guys should just let this thread die, the guy doesn't care about your logic and mathematics, doesn't understand the notion of risk and most importantly, will never change his mind.

I mean, he sees a house as a 100% risk-less thing, and every other investments as being more risky than putting the cash into a house. That alone should ring alarm bells.

What do you the point of the mortgage is?

In context personal debt isn't the same thing as other people's money.

It is a way of purchasing a house that you can't (or don't want to) buy with cash. People, in general, enjoy having a roof over their heads.

I wish I could go back in time and get other people to give me a free stake in a partnership because they thought I was smart.

Unfortunately, when I was young I wasn't smart enough to think of that, although I was probably smart enough to pull it off if I had.

OK. The only issue that I have with this is that I disagree that it is suboptimal. Maximizing ev is frequently not optimal.

I don't think it would be that hard for you to explain. I've both rented and have owned (paying cash once and also mortgaged several times). I currently rent even though I could buy.

Most people forget to add up all of the costs of owning (and buying and selling) and that the structure itself depreciates over time.

Very embarrassing thread. You are far better off in life just saying no to debt. Imagine creating a perfect human being from scratch. It is your job to send him on his/her best journey possibly. Having him take on debt would not be part of it.

I know you geniuses have better theories than Buffett. People who think I am a fanboy of Buffett are missing the point. I am a fan of his methodologies. Not a single person on planet earth, out of over 100 billion who ever lived, has done better investing and buying businesses than he has.

Yet, many of you suggest that he should have taken out a mortgage when he bought his house in 1957 when he was 27 years old and had three kids...lol.

I cannot take you seriously. Just like I didn't take you seriously when you suggested a few years ago that the market goes up 9 percent long-term and so you should carry a mortgage and invest the difference.

Housing always goes up.....NOT. One day you will figure it out. Debt creates problems. You need cash to be able to take advantage of those few times in your life when great bargains are available or misfortune shows up at your door.

You can't really be this ignorant, can you?

Fun post. It almost implies that a house is liquid. And somehow I know that someone at the moment is writing up a 5 paragraphs reply to this.

Not me. I can't figure out if he is ******ed or trolling but either way done responding.

AGAIN.....for the THIRD TIME


WHERE DOES IT SAY ANYWHERE THAT HE PAID FOR THIS HOUSE CASH????

I'm so sorry. You just don't understand. The REASON that you need lots of cash is so that you can BUY assets on the cheap when the opportunities come.

The great opportunities don't come as often as you would wish, but they do come. In 2008 all of those Wall Street clowns were fully invested and EVERYTHING went down.

The great investors, like Buffett and Seth Klarman, always have more cash on hand than their peers, and that is why they are the best. At the end of the day, cash is the ultimate goal of any investment. At some point you need to turn an asset into cash (by selling it, or receiving cash flow).

The form of currency used to purchase all assets is CASH. Cash is always king, and it always has been. Wake up.

So why spend all your CASH on a ****ing house rather than mortgage it and have the cash available for purchasing undervalued assets when you get the chance?!!!

Last post then confirmed troll

I just got off the phone with one of my friends in the banking industry. From his records search, he said that not only did he have a mortgage but it was variable rate and he put 0% down and got cash back at the closing.

There. Now we have the only information anywhere on the net regarding this matter. Hope this settles things.

Sure, but we are talking about Buffet, who COULD have bought with cash. Which would let him use other peoples money to invest.

You are leaving out my "or doesn't want to."

Him paying cash or having a mortgage, had nothing to do with him leveraging investments to increase returns.

Him not wanting to do it has nothing to do with whether or not the fact that having the extra cash (other people's money) would let him invest with that cash.

No reason to be an A hole.

This seems to be at the center of the ******ed discussion going on by one person here who keeps making this point as his argument. It's an important piece of information here which he wont even respond to...aka POTLEEMIT

There is no reason for us to believe Buffett did not mortgage his house all the same. Interest rates were close to what they are now (VERY low).

True. Fortunately for him, he didn't have to invest his cash at all. It is always better to be given a stake in a partnership than to buy one.

I wasn't being mean towards you - just expressing similar frustration. There is absolutely no evidence that he paid cash that I could find. The guy you were arguing with is just making stuff up.

Are you monkeys still arguing over whether Buffett paid cash for his house....lol. What garbage. If you don't know basic facts then STOP commenting.