@Sparkly,

1. I have other means of servicing the loan independent of the stock

2. Am not experienced or knowledgeable about the stocks, but I have been luck previously (Bought Sasini at 6.30 and sold at 15 but not a lot of shares)

3. Some stocks am seeing are really cheap, that the company can either go bankrupt of up. I don't see how further down they go except bankruptcy!

4. I am an expert in tolerating market fluctuations. Bought Safaricom at 4 solid at 7 and bought at 3 and just sold at 7. But dew to low vol investment I don't think am getting much. Bought Access K at 35 and at 20 and now is at what 9 bucks....that is one stupid stock. But I have learned from it!

5. I can get a cheap loan (at 7-10% interest). If take loan for 1-2yrs. And then pay out of pocket. Will the stock hold my value and return my interest and a profit? Can the stock return 20-30% in 2yrs for me to justify the loan? That is my question.


6. Am aware also that I can loose everything and that is a risk associated with business!

Which specific stocks are we talking about here @mBiaLoss? ...

... very risky counters. i believe nobody can tell how low they can go

he he @obiero. your signature¡¡¡ you must be having many of these chips

Sikia kiyana. Now that you must take the loan, listen to the signature of one wazuan quoting siyui Einstein, " ?buy land they dont make it any more. . . " The balance you can give your stovk broker for gambling . Come back after five years and thank me.
Sell the shares ujenge hiyo plot or better still. . .Uza plot and invest in shares or another plot.

Its Mark Twain...

Interesting that @maka

................................................................................................

Mr. Munger thinks that if one does not learn this probabilistic form of thinking then a person will “go through a long life like a one-legged man in an ass-kicking contest.”

"Most investors strive fruitlessly for certainty and precision, avoiding situations in which information is difficult to obtain. Yet high uncertainty is frequently accompanied by low prices. By the time the uncertainty is resolved, prices are likely to have risen. Investors frequently benefit from making investment decisions with less than perfect knowledge and are well rewarded for bearing the risk of uncertainty. The time other investors spend delving into the last unanswered detail may cost them the chance to buy in at prices so low that they offer a margin of safety despite the incomplete information." Margin of Safety, Seth Klarman

An example which is quite useful to see how one handicaps investments is to figure what percentage of one’s portfolio a person is willing to invest based on the following hypothetical scenario: A company trades at $100 a share and has a 50% probability of being worth zero and a 50% probability being worth $300 a share. How much of one’s portfolio should an investor put into this scenario? The answer is 25% according to the Kelly criterion . The Kelly formula attempts to maximize one’s net worth, but also maximizes volatility. Investor’s have a difficult time dealing with maximum volatility and trusting their analysis when a company’s value may drop 50% or more before their investment pays off. On the other hand many times investors overweight the probability of success of an investment when the odds of success are actually much lower than those projected.

". . . information generally follows the well-known 80/20 rule: the first 80 percent of the available information is gathered in the first 20 percent of the time spent. The value of in-depth fundamental analysis is subject to diminishing marginal returns." Margin of Safety, Seth Klarman

Thanks I read the article, it just re-enforces my chain of thought. If you invest in stock that is priced so low, there are only two chances, either the company goes bankrupt and you loose everything, or the company recovers and you gain a lot.
Does anybody really think that KQ will soon go bankrupt? I don't think so, but what if it does go bankrupt and I lose all borrowed money? That is a risk am will to take right now!

What amount are you talking about and how long are you willing to hold onto the shares?