{"id":7050053,"date":"2026-08-28T14:50:56","date_gmt":"2026-08-28T14:50:56","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/why-investors-must-think-about-debt-in-volatile-times\/"},"modified":"2026-08-28T14:50:56","modified_gmt":"2026-08-28T14:50:56","slug":"why-investors-must-think-about-debt-in-volatile-times","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=7050053","title":{"rendered":"Why investors must think about debt in volatile times"},"content":{"rendered":"


\n<\/p>\n

\n

By Tom Bradley<\/p>\n

I\u2019m a voracious reader of business, technology and economics, but the more I understand the issues and trends these days, the more out of control I feel. You know what I\u2019m referring to: artificial intelligence, international tensions and conflict, short-sighted government policy and power concentrated in fewer hands that aren\u2019t accountable to voters or shareholders.<\/p>\n

It feels worse than usual, although it\u2019s not as if investors ever have much control. Returns are always dependent on a myriad of unpredictable factors that interact in unpredictable ways. If you think you\u2019ve figured the markets out, you\u2019re kidding yourself.<\/p>\n

So, what to do? At times like this, I go back to a pile of reports and articles on my desk labelled \u201cKeep.\u201d It focuses me on investment fundamentals such as growth and profits instead of politics and speculation. It provides perspective on how long markets can stay off trend and\/or act irrationally. And it usually includes something about, or written by, Warren Buffett.<\/p>\n

While diving into the pile last week, a number of things jumped out as being relevant to today\u2019s investment landscape.<\/p>\n

First, my time frame (and most of our clients\u2019) is exceedingly long. Most of what is perplexing today won\u2019t even show up on a chart of my portfolio in 20 years, or even 10.<\/p>\n

There\u2019s plenty of stuff on valuation. A quote by James Montier of U.S. asset manager GMO was highlighted in flaming pink: \u201cValuation is the closest thing to the law of gravity that we have in finance. It is the primary determinant of long-term returns.\u201d The reminder comes at a time when price is taking a back seat to stories and hope.<\/p>\n

The topic that resonated most, however, was debt. That\u2019s because leverage in individual and institutional portfolios is at an all-time high. Hedge fund strategies and private asset returns are highly dependent on borrowing, and more individual investors are using margin accounts.<\/p>\n

Debt is a Jekyll and Hyde topic. It\u2019s easily forgotten when things are going well and is the only thing that matters when they\u2019re not.<\/p>\n

It exaggerates outcomes in both directions, juicing returns on the way up and amplifying losses on the way down. But the impacts are far from equal.<\/p>\n

Upside is easy and feels wonderful while it\u2019s happening. For the 40 years prior to 2022, homeowners were giddy watching their net worth steadily rise. They couldn\u2019t believe their good fortune.<\/p>\n

It follows then that when prices go down, losses in levered portfolios are worse, but that\u2019s just the beginning. Things can get difficult fast.<\/p>\n

It\u2019s psychologically harder to hang in and stay invested when your net worth is disappearing (or is negative). Exponentially harder.<\/p>\n

And you\u2019re not the only one who has to hang in. Your lender, whether it\u2019s a bank or investment dealer, also has to stay the course. Unfortunately, they never do. Before long, you\u2019ll get a call asking you to either stump up more money or sell something.<\/p>\n

But that\u2019s not the end of it. After you deleverage, your ability to recover is impaired. You\u2019ll have less capital invested because you\u2019ll be less willing to use debt a second time around, and even if you are, your lender is less likely to provide the credit you need.<\/p>\n

It\u2019s a bad formula \u2013 going back up with less invested than you went down with.<\/p>\n

This asymmetry of outcomes was front and centre in a discussion<\/a> I found between Howard Marks, founder of Oaktree Capital, and Morgan Housel, a bestselling author and behavioral finance guru. They talked at length about investors\u2019 durability and endurance. At one point, Mr. Housel said: \u201cThe more debt you have, the narrower the range of bad outcomes you can survive.\u201d<\/p>\n

Mr. Marks\u2019 words from two years ago spoke to the current tension between AI\u2019s risks and unknowns and the increased use of debt. He said, \u201cA highly leveraged capital structure cannot co-exist with highly volatile assets. If you want to buy volatile assets, your capital structure should be conservative. If you want to use leverage, you buy conservative assets.\u201d<\/p>\n

They differentiated between maximizing (\u201ctrying to get the most you can, the soonest you can\u201d) and optimizing (\u201cthe best returns that you can sustain for the longest period of time\u201d).<\/p>\n

Right now, there\u2019s a lot of maximizing going on, with the increased use of leverage and options. My fundamental reset, however, tells me investors should be doing the opposite. Volatile stock prices and changeable AI narratives point toward optimizing. Make sure you can stick to your plan, no matter how this technology revolution plays out.<\/p>\n

Tom Bradley is a portfolio manager with Purpose Investments, co-founder of Steadyhand Investment Management, a member of the Investment Hall of Fame and a champion of timeless investment principles.<\/em><\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"

By Tom Bradley I\u2019m a voracious reader of business, technology and economics, but the more I understand the issues and trends these days, the more out of control I feel. You know what I\u2019m referring to: artificial intelligence, international tensions and conflict, short-sighted government policy and power concentrated in fewer hands that aren\u2019t accountable to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[11265,11223,4319,55771],"dealstore":[],"offerexpiration":[],"class_list":["post-7050053","post","type-post","status-publish","format-standard","hentry","category-investing","tag-debt","tag-investors","tag-times","tag-volatile"],"yoast_head":"\nWhy investors must think about debt in volatile times - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=7050053\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why investors must think about debt in volatile times - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"By Tom Bradley I\u2019m a voracious reader of business, technology and economics, but the more I understand the issues and trends these days, the more out of control I feel. You know what I\u2019m referring to: artificial intelligence, international tensions and conflict, short-sighted government policy and power concentrated in fewer hands that aren\u2019t accountable to […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fivemor.com\/?p=7050053\" \/>\n<meta property=\"og:site_name\" content=\"Som2ny Network\" \/>\n<meta property=\"article:published_time\" content=\"2026-08-28T14:50:56+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/fivemor.com\/?p=7050053#article\",\"isPartOf\":{\"@id\":\"https:\/\/fivemor.com\/?p=7050053\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371\"},\"headline\":\"Why investors must think about debt in volatile times\",\"datePublished\":\"2026-08-28T14:50:56+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/fivemor.com\/?p=7050053\"},\"wordCount\":823,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/fivemor.com\/#organization\"},\"keywords\":[\"Debt\",\"Investors\",\"Times\",\"Volatile\"],\"articleSection\":[\"Investing\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/fivemor.com\/?p=7050053#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fivemor.com\/?p=7050053\",\"url\":\"https:\/\/fivemor.com\/?p=7050053\",\"name\":\"Why investors must think about debt in volatile times - Som2ny Network\",\"isPartOf\":{\"@id\":\"https:\/\/fivemor.com\/#website\"},\"datePublished\":\"2026-08-28T14:50:56+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/fivemor.com\/?p=7050053#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/fivemor.com\/?p=7050053\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/fivemor.com\/?p=7050053#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/fivemor.com\/?bp_activities=1\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Why investors must think about debt in volatile times\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/fivemor.com\/#website\",\"url\":\"https:\/\/fivemor.com\/\",\"name\":\"Som2ny Network\",\"description\":\"Daily Deals\",\"publisher\":{\"@id\":\"https:\/\/fivemor.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/fivemor.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/fivemor.com\/#organization\",\"name\":\"Som2ny Network\",\"url\":\"https:\/\/fivemor.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png\",\"contentUrl\":\"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png\",\"width\":300,\"height\":86,\"caption\":\"Som2ny Network\"},\"image\":{\"@id\":\"https:\/\/fivemor.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/fivemor.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png\",\"caption\":\"admin\"},\"sameAs\":[\"https:\/\/fivemor.com\"],\"url\":\"https:\/\/fivemor.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Why investors must think about debt in volatile times - Som2ny Network","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/fivemor.com\/?p=7050053","og_locale":"en_US","og_type":"article","og_title":"Why investors must think about debt in volatile times - Som2ny Network","og_description":"By Tom Bradley I\u2019m a voracious reader of business, technology and economics, but the more I understand the issues and trends these days, the more out of control I feel. You know what I\u2019m referring to: artificial intelligence, international tensions and conflict, short-sighted government policy and power concentrated in fewer hands that aren\u2019t accountable to […]","og_url":"https:\/\/fivemor.com\/?p=7050053","og_site_name":"Som2ny Network","article_published_time":"2026-08-28T14:50:56+00:00","author":"admin","twitter_card":"summary_large_image","twitter_misc":{"Written by":"admin","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/fivemor.com\/?p=7050053#article","isPartOf":{"@id":"https:\/\/fivemor.com\/?p=7050053"},"author":{"name":"admin","@id":"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371"},"headline":"Why investors must think about debt in volatile times","datePublished":"2026-08-28T14:50:56+00:00","mainEntityOfPage":{"@id":"https:\/\/fivemor.com\/?p=7050053"},"wordCount":823,"commentCount":0,"publisher":{"@id":"https:\/\/fivemor.com\/#organization"},"keywords":["Debt","Investors","Times","Volatile"],"articleSection":["Investing"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/fivemor.com\/?p=7050053#respond"]}]},{"@type":"WebPage","@id":"https:\/\/fivemor.com\/?p=7050053","url":"https:\/\/fivemor.com\/?p=7050053","name":"Why investors must think about debt in volatile times - Som2ny Network","isPartOf":{"@id":"https:\/\/fivemor.com\/#website"},"datePublished":"2026-08-28T14:50:56+00:00","breadcrumb":{"@id":"https:\/\/fivemor.com\/?p=7050053#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/fivemor.com\/?p=7050053"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/fivemor.com\/?p=7050053#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/fivemor.com\/?bp_activities=1"},{"@type":"ListItem","position":2,"name":"Why investors must think about debt in volatile times"}]},{"@type":"WebSite","@id":"https:\/\/fivemor.com\/#website","url":"https:\/\/fivemor.com\/","name":"Som2ny Network","description":"Daily Deals","publisher":{"@id":"https:\/\/fivemor.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/fivemor.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/fivemor.com\/#organization","name":"Som2ny Network","url":"https:\/\/fivemor.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/fivemor.com\/#\/schema\/logo\/image\/","url":"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png","contentUrl":"https:\/\/fivemor.com\/wp-content\/uploads\/2026\/07\/4a0953c4-logo-300x86-1.png","width":300,"height":86,"caption":"Som2ny Network"},"image":{"@id":"https:\/\/fivemor.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/fivemor.com\/#\/schema\/person\/b85e3c3dc0e1daea076524dc8810c371","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/fivemor.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/729ae85bf62b9917e93538db2f2688ca?s=96&r=g&default=https%3A%2F%2Ffivemor.com%2Fwp-content%2Fplugins%2Fbuddypress-first-letter-avatar%2Fimages%2Fdefault%2F96%2Flatin_a.png","caption":"admin"},"sameAs":["https:\/\/fivemor.com"],"url":"https:\/\/fivemor.com\/?author=1"}]}},"_links":{"self":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/posts\/7050053","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7050053"}],"version-history":[{"count":0,"href":"https:\/\/fivemor.com\/index.php?rest_route=\/wp\/v2\/posts\/7050053\/revisions"}],"wp:attachment":[{"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7050053"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7050053"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7050053"},{"taxonomy":"dealstore","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fdealstore&post=7050053"},{"taxonomy":"offerexpiration","embeddable":true,"href":"https:\/\/fivemor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fofferexpiration&post=7050053"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}