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by meric 5501 days ago
>>Acquiring it through a credit instrument didn't pass the test, since you just moved the obligation forward in time, and if you couldn't come up with it now then why do you think you can come up with even more later?

What about stocks? I need three days for a sale of stocks to settle and take the money out. If I have an emergency I can use my credit card. (and pay it back at the end of the month).
2 comments
2arrs2ells 5501 days ago
Stock (plus a credit card while you wait for settlement) is certainly fine, but be careful...

The times that you are more likely to need liquidity (loss of job, economic crisis) are also the times that the stock market is likely to be incredibly low.

You might end up like many hedge funds who (as a result of some toxic assets) ended up having to sell good assets at firesale prices during the recent recession.

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hugh3 5501 days ago
True, but on the other hand, with US-dollar interest rates being what they are at the moment, the alternative to keeping your money in shares (or a similar volatile liquid investment) is keeping it your savings account at 1% or less. I keep a few grand in cash, but everything else goes in the sharemarket.
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ChuckMcM 5501 days ago
Stock absolutely counts, but it has an interesting caveat. If you read the article they included the caveat "...within 30 days." Which covers the 'you pay it now with a credit card and you pay it off when the CC bill arrives' scenario.

Back in the 80's when I was trying to buy a house, part of the down payment was going to be funded by the sale of stock (I had worked for Intel and had vested a few shares). How much of the down payment was flipping all over the map as Intel's price went up and down and up and down. On the one hand I wanted to hold it as long as possible (the trend was upward) but I didn't want to get caught in a dip either. My wife and I picked a number we felt was "reasonable" and put that in as a 'limit' order. When that fired, we picked the best choice of the three houses we had as candidates and made an offer on the house.

The stock was up an additional 5% by the time we closed but had been down at least 5% between the sale and the close. Very stressful if we had been under contract and the price was falling.

Flash forward to the dot-com days, a good friend bought a house beyond their means and was making payments by selling stock. When the bubble popped they had to sell the house. Not ideal but it didn't leave them permanently stuck.

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