Ryan foreman wrote:
Portia,
I agree with you in that I don't think the debt is a bubble that is going to pop. But it does go to show that earnings are incredibly underwhelming when you put it into context of the increased debt and the way the Fed has virtually been throwing trillions of dollars out the door by artificially keeping interest rates low. Moreover, so much of that debt has been used to finance stock buybacks even in the midst of a mature bull market instead of investing to grow the company. That is not a good sign for healthy sustained profit growth into the future.
Ryan, thank you for your thoughtful and respectful reply. It's nice to be reminded that people can disagree and still be civil. I understand your position and believe you may be proven right. However, I still maintain that using low interest debt to finance buybacks can be beneficial to the investor. Of course as is often the case, there are multiple variables at work here. Invariably we find that one financial strategy works best for one company while a very different strategy works for another. It's certainly not a case of one size fits all as some here would have us believe.