muscleman Posted March 3, 2014 Share Posted March 3, 2014 I have been thinking about BRK and FFH's success, and I wonder what is the difference between buying stocks with margin vs buying stocks with float? For stocks with margin, the current interest rate is just 1.5%, which is pretty low cost leverage. However, margin calls can potentially wipe out the investor overnight. But for insurance floats, don't they have similarities? If the float is used to buy stocks, and the stock market crashes, won't regulators ask for dilutive capital increases? Ideally, if I were a CEO, I would want to have an operating subsidiary which is a stable cash cow, that can be leveraged up, and then I will move the money to the other investing subsidiary to buy stocks. Then I won't worry about margin calls. Thoughts? Link to comment Share on other sites More sharing options...
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