@NewUser38991 said in Borrowing to gain:
@mike778 you are wrong. It will replicate even faster in the next few months. With Guillem Balague - have you checked how many followers and views he has on youtube??? - and compare it with the current user base of 170.000 accounts on FI. And with the sky deal and with other territories etc there is only one way and thats up..... I m ready! My seat belt is fasten!
The problem is that historically the stock market has provided a yield of 10% pa. Football Index is obviously significantly higher risk so to be a 'good investment' you would expect a 15% yield.
As prices rise, fewer and fewer players will return 15% based on dividends so you are relying on capital growth. But if players aren't returning enough from dividends then they aren't a good investment (rationally) so they shouldn't increase. What we are seeing at the moment is people seeing players rise and rise so are putting more money in to the point they are over-valued. This is the pure definition of a bubble. If prices dip then logically there is no reason to keep your money in (as dividends don't justify the hold) so people should sell hence a crash. I would suspect there are a lot of people with a lot of money invested who are ready to exit once prices stop rising.
For the record I don't think this will happen. I have confidence the market will keep rising - people aren't rational and I suspect once prices level off they will increase dividends and prevent a crash. I'm happy to keep putting money in as I think it will make more and more profits. But its money I'm prepared to lose. I personally wouldn't take on debt to invest in what look to be on the whole over-valued assets.
I'm not scare-mongering and I do still think it a decent investment for a lot of the reasons you say, I'm pretty risk averse and I generally avoid any debt whatsoever outside of my mortgage which I paid off asap . The thread on keepers proves that for a lot of people value for money is irrelevant, people will put their money into anything irrationally and if they do that then dividends don't really matter. Just need to be aware current prices for a lot of players (particularly those not returning 15% dividend yield) are over-inflated.