As To Being "Under Leveraged"

[ProfessorGAC]

For those that didn't see it, PINO claims he's not broke, in fact he's is under leveraged.
This is further proof he was a crummy business school student, and a rotten businessman.
Fundamentally, there is no such thing as being under leveraged!
Apple has an asset value above $1 TRILLION. Their total debt load is $69 billion. A debt to equity ration of 0.069.
Nobody, and I mean nobody says they're "under leveraged."
There is a possibility that a company stagnating because they refuse to borrow for expansion or acquisition, when they have a very low D/E, could be considered that. But, that wouldn't be accurate. More accurately, this shows them as so risk averse that it negatively affects their strategy. But, for their current situation, even they aren't "underleveraged".
The fact is, that the D/E ratio that looks to be below industry standard was based on inflated asset value, and grotesquely understated debt load.
PINO seems to be oblivious to the fact that all those other loans are well known. It is still using the fake numbers from the TO in 2016.
He's lying, again, and us using an excuse that sounds " businessy", but is something that doesn't even exist.
Probably not a surprise to any of us here!

[Maeve]

1. Hubby had a client that tried the same business model

He would get loans to buy more stuff to get loans on, in the belief that the price of land never goes down...he was on top of the world for years....until right around 2007-08.

He a sad,pathetic and much poorer man than he used to be, and blames Obama for what he did to himself.

[maxsolomon]

19. Obama wasn't POTUS in 2008.

Anything to avoid blaming himself.

[Maeve]

20. Exactly!

The guy is a bit of a good old boy type and casually racist...sort of like tRump

[grantcart]

2. Trump has a tell that reveals his inner most fear

He grabs it and repeatedly shouts the opposite. Then repeatedly shouts it some more.


"My hands are not small".

"I am the smartest guy around"

"I know more than anyone"


During the debates with Secretary Clinton she summarized a whole list of obvious reasons that Trump should not be President. From memory they were something like

"He's a puppet of Putin, he doesn't have the temperament to be President, he is way over leveraged, he lies continuously, he is out of touch with the average American, he won't be respected by our allies and he create huge deficits with wild spending and enormous tax cuts to the rich".

When she finished he repeatedly said "I AM NOT OVER LEVERAGED, I AM NOT OVER LEVERAGED, I AM NOT OVER LEVERAGED, I AM NOT OVER LEVERAGED".

She had hit him with a dozen insults and the only thing that lit him up was being over leveraged.

I was watching with a business friend and we both looked at each other and said in unison "Boy is he over leveraged".

[Thekaspervote]

3. Gonna be very interesting where Forbes puts him in ranking of the most wealthy

Found in the “under leveraged” category??!!

[ProfessorGAC]

6. Already Happened

Forbes already downgraded the net worth by $600 million.

It has been a tough year for President Trump. On top of impeachment and the pandemic, his net worth has dropped an estimated $600 million since last September, to $2.5 billion. That puts him at No. 339 on The Forbes 400, down 64 spots from a year ago.

It's still grossly overstated. Apparently, nobody at Forbes read the readily available Moody's report in 2018.
But it is down to 339 in the top 400.
And the vast majority of the people in at least the top 200, didn't inherit $400 million 30 years ago!
Even if the Forbes number was right (it's not), this constitutes a 4x growth in 30 years. That's under 4.8% annual return. Over a timeframe where the major indices averaged 9.6% per year.
Brilliant finance that isn't.
And it's overstated. So it's somewhere between worse & much, much worse.

[Thekaspervote]

8. Good!! On the way down and out!!

[Walleye]

4. His fat ass is over leveraged. That's why he hast to stand leaning forward.

[spooky3]

5. Trump is running a Ponzi scheme on himself. Nt

[ihas2stinkyfeet]

7. i am under leveraged.

which is why i can tell my ex to go to hell.

i own 4 pieces of property. i have one mortgage, for about half the value of the property.
which is why i can pay all my taxes and utilities on the check for one of them.
and why having one empty and one not paying because i am evicted them for not masking, and i am not hurting.
and why, w mortgages so cheap, i can buy 2 more soon.

i went to art school. but my folks were depression era. i learned that shit as a kid.

[ProfessorGAC]

10. No, You're Not

What you describe is a very sound financial strategy.
But, if you covered the mortgage, sold a spike property at a 120% gain, took the money and bought 2 more, you'd have 5, with no mortgage. That's good business.
There is no business strategy that involves being "under" leveraged.
You are lightly leveraged. Not underleveraged.
There truly is no such thing as underleveraged.

[ihas2stinkyfeet]

14. well w mortgages at 2.5%,

and now having a personal banker, as i am a high net worth individual, i can afford the 2 more w/o dipping into my savings.
i took the ex to the cleaners 6 yrs ago and have doubled that. i invest in my values, and it has worked very, very well.

but the one w the mortgage is the one w an unmetered water account. that is the water for my urban farm.
one of the ones on the table is the last of 4 in a row, completing my farm.
and the 2nd is next to the single family rental that i bought cheap and rehabbed. that one pays the bills.

property values are obscenely low in this hood. no one EVER sells here. when we bought this place
the 2flats on either side were owned by heirs of the original owners.
rents are cheap, too, as the renters never move, either. but i can still make money. it's a great place to live. close to the lake, an public trans to literary any where in the world. 25 min downtown.
my units are top of the market. and when i get them all on renewables, i will get more than that, even.

[ProfessorGAC]

17. There's No Argument Here

You are very lightly leveraged, not underleveraged.
If you are willing to assume greater risk by adding leverage, rather than depleting performing assets, you could add leverage for expansion.
If you're more risk averse, you add less leverage and use existing assets to expand a little less.
Or, you could do nothing and focus on the properties you do have.
None of that constitutes underleverage.
Leverage degrees is a matter of risk management, until one gets to a dangerous degree, say a D/E >2. (Higher in capital intensive industries.)
I'm glad for you & your success, but the point here is that no matter one's financial position, there's no such thing as having too little debt.

[Cirque du So-What]

9. He's not morbidly obese

He’s big-boned.

[tblue37]

11. And those bones jiggle like jello.

[Le Roi de Pot]

12. Any Leverage is over leveraged if you have a faulty business model.

Trump wants to be Louis Vuitton .. .. He may have the best leather with 24 K gold buckles --- but your target market doesn't like it and you cannot/ do not sell it as mass produced item -- then you are pretty much Fucked.

At some point cashflows will not meet the required amount to service debt - nor will you have enough reserves to make payments.


Its just common sense.

[ProfessorGAC]

13. Dead On!

Which reinforces the notion that there no such thing as "underleveraged".
Any level of leverage supported by revenue is ok. There's an upper " wisdom limit" because if it's too high, a hiccup can become tragic.
But, if somebody owned a billion dollar business, with zero debt, and cash flow to reinvest for growth & improvements, nobody in their right mind would say they're "underleveraged". Why would someone in that spot take on any debt?
But, a bad business model makes any level of debt potentially problematic.
And, PINO is proof. Although he's lying about the level of debt he carries, his supposedly low level of debt, and massive losses doesn't exactly suggest a great business model!

[Le Roi de Pot]

16. Agree and Disagree

From a Risk perspective - Agreed - best to be 100% equity and no debt.

From a finance perspective - being under levered means that you could be more profitable if you took on more debt.

Generally in a high growth business - cost of equity is much higher than cost of debt. Debt also shields you some from taxes.( So the move by Donald Trump to lower corporate tax rate cap to 20% fucked up many financial setups fine tuned to a higher tax rate)

I am not in finance - I am a marketing guy -- but just remember enough from B-School Corp-Fin class not be awed by the Finance guys..

[ProfessorGAC]

18. You're Not Disagreeing At All

You said the same thing I did, just in a different way.
And your growth industry example is fine except for the irrational nature of market pricing in growth industry stock betting on a long term future.
Either way, adding leverage still keeps D/E down if equity value is high!
So, risk is still abated to a degree.
As I said in my OP, nobody is accusing Apple of foolish business practices because their D/E is 0.069.
It's just how the world's biggest company decided to do business!
Like you, my field isn't finance. I'm a retired scientist, but at the company's insistence I got an MBA that they paid for. My focus was in Economics & Finance.
That, and the fact that I worked in management of a couple multinationals until I retired, is why I have a decent grip on this stuff.

[ihas2stinkyfeet]

15. the chicago tower is so very under water.

it already was doing poorly from day 1. but in the home of the blue, it now sucks money like a hoover.
and that's after he got a property tax break, via old eddie burke, by blaming his architect for the fact that they never rented the ground floor retail. 'bad sight lines'. yeah. on the fancy new riverwalk. sure.