Using Margin Judiciously

Margin took some real knocks this week from the press, most of whom, until this week, thought margin was that thing on the left hand side of a piece of lined paper. So now that we have seen and heard of the underside of margin from just about everybody, why do we allow it at all?

Margin, of course, is just another form of credit. The notion of borrowing money, per se, is not a bad one. People borrow money when they don't currently have the money on hand they need to make a sizable purchase but the purchase is necessary.

That's how I prefer to use margin at my company. I use it judiciously, a couple of times a year when I need capital to make a sizable bet. Sometimes we think that stocks get so cheap that we are willing to lever up. In 1991, when I was trading with my wife, we made a huge margin bet. ...