[teambayleaf]

> Having debt in your capital structure indefinitely is a perfectly fine decision to make.

We're hearing this argument a lot recently, but aren't we past that already in 1980s?

As I recall, it was somewhat popular among companies to pile up leverages by buying a large potion of their own stocks. The reasoning was the same as today: it was supposed to benefit shareholders because a levereged BS has tax benefits.

... which subsequently resulted in those highly-levereged ("recap'ed") companies filing for bunkruptcy. So that hack was shunned by the time of 1990s. What does make this time different?

[eru]

If you have shares in enough companies, you don't particularly care if a few of them go bankrupt every once in a while, _if_ that trade-off makes you enough money on average.

Mostly things haven't changed that much since the 1980s. The biggest difference is probably that individual investors are les likely to own specific shares, and more likely to own via an (index) fund.

(That doesn't mean that any particular balance between equity and debt is the right one. Just that the occasional bankruptcy is not a nail in the coffin.)