Depends on your risk appetite and the interest rate. There's nothing inherently wrong with either approach. But paying cash means you can't do anything else with it, so if you can finance through a loan and can make a higher return with your cash elsewhere than the interest you pay on the loan, then from a "maximize your profits" point of view, you're better off borrowing. If you think the risks of investing elsewhere are too high, you're probably better off buying real estate. Or you can spread your risk by putting money into both.

Oh yeah, avoiding paying all that mortgage interest is super dumb. — Pfhorrest

Well, interest rates are the lowest ever, like in thousands of years low. And creating mortrages is the most normal thing any bank will do.

If you think the risks of investing elsewhere are too high, you're probably better off buying real estate. Or you can spread your risk by putting money into both. — Benkei

Buying real estate isn't a hedge against stocks or other capital investments. In a credit crunch or a collapse of a speculative boom boths stocks and housing prices come crashing down. Yet do notice that it's a rather rare event: I've just seen one housing crash in my lifetime of investing, but several stock market downfalls.

Blame implies wrongdoing. To admit to myself, I made a bad investment, I lost money, is not a big deal. To think that some traders cheated me out of my investment is a big deal. Notice it's "to think that some traders cheated me...". When people start to point fingers at wrongdoing, then the truth or falsity of this or that particular instance doesn't even matter anymore, just like for the Trump supporters who thought that they got cheated out of the election. — Metaphysician Undercover

I think the truth or falsity of the accusation genuinely does matter here. If there was actual fraud or something criminal behind the scenes then investors/traders absolutely have a right to be upset. However, if a whale simply decides to buy or sell today and traders get stopped out when they were using high leverage then it's hard to feel bad for them because they willingly went out of their way to take on this additional risk. Traders or investors or whatever you want to call them need to go out of their way to use leverage. Most exchanges don't even offer it.

It's not always market manipulation either. Some traders or "investors" set their stop losses too close to the price and when it hits those "investors" get "forced to sell" just on normal market swings.

I wonder how much water this whale is going to displace by the time it's landed. It's not going to be as easy as winning the Goldfish at the state fair.

However, if a whale simply decides to buy or sell today and traders get stopped out when they were using high leverage then it's hard to feel bad for them because they willingly went out of their way to take on this additional risk. Traders or investors or whatever you want to call them need to go out of their way to use leverage. Most exchanges don't even offer it. — BitconnectCarlos

The issue is not whether we ought to feel bad for the little fish getting crushed by the whale, the issue is the little fish pointing the finger of blame at the whale, and accusing the whale of wrongdoing. If one whale makes a sudden move which injures thousands of little fish, all those little fish are going to point a finger of blame at the whale, regardless of whether the whale was doing wrong, or the little fish were living dangerously. And that's a lot of fingers.

Now we cannot remove this attitude of pointing a finger of blame, it's human nature that if we can readily pass the fault to someone else, then obviously it wasn't my mistake, someone else caused this deprived situation. But it does create a real problem because casting blame around in a stormy sea is only conducive to creating further disturbances rather than calming things down. And those disturbance will only hurt more little fish. So the only way to avoid this nasty scenario is to have rules which prevent these situations from coming about in the first place.

It's not always market manipulation either. Some traders or "investors" set their stop losses too close to the price and when it hits those "investors" get "forced to sell" just on normal market swings. — BitconnectCarlos

Do you expect me, or anyone else to believe this? What constitutes "a normal market swing" in today's environment? Manipulation is the norm. There is no such distinction to be made, between normal market swing, and manipulation.

Well, interest rates are the lowest ever, like in thousands of years low. And creating mortrages is the most normal thing any bank will do. — ssu

Mortgages last a looooong time though. I'm buying a £270,000 house now that will cost me £367,000. Since houses are still one of the safest investment opportunities out there, it doesn't really make much sense to pay an additional £100,000 for the benefit of investing £228,000 elsewhere.

Oh yeah, avoiding paying all that mortgage interest is super dumb — Pfhorrest

And mortgage application fees and your solicitor's mortgage handling fees as the icing on the cake. Bastards.

Mortgages last a looooong time though. I'm buying a £270,000 house now that will cost me £367,000. Since houses are still one of the safest investment opportunities out there, it doesn't really make much sense to pay an additional £100,000 for the benefit of investing £228,000 elsewhere. — Kenosha Kid

If you are buying a house to live in yourself, I agree. I did buy my present home with cash too: where you live, it's not an investment, actually. Only in the long term it is an investment for your family as your children or other heirs inherit the home afterwards.

Yet if you put that house or flat for rent, then the debt is understandable: one can easily get an rent that pays for the interest and loan amortization still leaving a profit and you don't need to speculate where the housing prices go. Rents don't collapse in the similar fashion as housing markets , they are extremely rarely in a bubble as every rent is priced every month. Besides, the only true risk is if housing prices are below your buying price and at the same time you cannot pay the interest on your debt. Such an event is actually quite rare and this is the reason why speculative bubbles are so dangerous: otherwise the risks are low and it's the most simple game ever.

where you live, it's not an investment, actually — ssu

My first house put me through my degree, my PhD, a year-long round-the-world trip, and three months of volunteering. It was pretty good as investments go. :)

Yet if you put that house or flat for rent, then the debt is understandable: one can easily get an rent that pays for the interest and loan amortization still leaving a profit and you don't need to speculate where the housing prices go. — ssu

What you can charge for rent doesn't depend on how you paid for the property. You get the same whether you own it or have it mortgaged. The best thing if you're only looking for a short-term investment is to not get a repayment mortgage at all. Get an interest-only loan: the end result is the same, but you get to keep more of the cash every month.

Do you expect me, or anyone else to believe this? What constitutes "a normal market swing" in today's environment? Manipulation is the norm. There is no such distinction to be made, between normal market swing, and manipulation. — Metaphysician Undercover

If you want to be skeptical that's on you but it's happened with me a few times. Sometimes you just set your stop loss a little too tightly and you get stopped out. If you want to know what normal market volatility is they have volatility indexes and measures for that type of thing so I'd direct you there. If you want to say 'everything is manipulation' that's on you and it kinda of blurs the distinction between actual misdeeds and normal buying and selling.

If you want to say 'everything is manipulation' that's on you and it kinda of blurs the distinction between actual misdeeds and normal buying and selling. — BitconnectCarlos

I think, having a blurred distinction is one step better than having misdeeds sanctioned by regulations, and passing as normal.

What is it specifically that you want to see outlawed or better regulated?

For my part I think it generally ought to be illegal to sell anything you don’t own.

Ok so you don't believe that people should be able to borrow funds or have lines of credit extended to them, ok. I wonder how many economists would share this view.

I think that trading is inherently wrong. The trader doesn't provide any sort of service to anyone, yet the trader requires payment.

What do you mean "the trader requires payment?" The trade doesn't happen unless there is a buyer and a seller, both of whom believe that he has done something beneficial for himself upon doing the trade. By the trade happening its fulfilling both sides wishes.

Ok so you don't believe that people should be able to borrow funds or have lines of credit extended to them, ok. — BitconnectCarlos

That’s not selling something you don’t own.

More comparable would be renting a house and selling it to someone. How could you even do that? It’s not yours to sell.

What makes borrowing a stock and selling it any different? It’s not yours, how can you sell it?

ETA: On re-read I can see how one might construe spending borrowed money as "selling something you don't own" now. In any case I'm not specifically against that, but it is the case that in a properly functioning economy as I see it, nobody would have to borrow, except in the figurative sense of "borrowing from oneself", as capital ownership would be widely dispersed, so everyone would just have a pile of diverse invested capital that they could sell some of to get the money they need to spend on some newer more specific investment, like a new business. Large undertakings beyond the scale of one person's share of capital would require other people going in on it with you, and for their investment they would get equity in the venture; they wouldn't actually be lending money per se.

What do you mean "the trader requires payment?" — BitconnectCarlos

Would anyone persist in an occupation without making any money? That's what I mean, to support the existence of traders, the traders must make money, or else they'd all leave the market place knowing that there is no money to be made there..

The trade doesn't happen unless there is a buyer and a seller, both of whom believe that he has done something beneficial for himself upon doing the trade. — BitconnectCarlos

The belief that he's doing "something beneficial for himself", is the belief that he is going to make money.
So the trader believes that he is going to make some money. Now what is the service that the trader provides, for which he believes he will get paid? If he's not providing any service, then why should he would get paid? And if he believed that he shouldn't get paid, because he's not providing any service, then he wouldn't be there trying to do "something beneficial for himself".

If I have a bunch of pencils but no paper, and you have a bunch of paper but no pencils, we can together create value for each other by trading some pencils for some paper.

If all trades were like that, we'd go to the market place, trade our wares, and go home with what we needed. The world would be a beautiful place to live in. However, traders hang around the market place, without bringing any wares, looking to do something beneficial for themselves. Are they like dogs begging for scraps? No, they're more cunning than beggars, creating the illusion that they are providing you with a service, only to take advantage of you.

It is handy if someone hangs around the marketplace to buy things from people looking to sell and sell things to people looking to buy, so that I don’t have to wait around there for you to need some pencils in order to sell them, or for you to show up with some paper to buy it. The guys hanging around the market do pay less for my pencils and charge more for the paper they got from you, true, but if it weren’t worth the convenience of just buying and selling from whoever’s available down there at the market, then I could always cut them out of the loop... if it’s worth that effort... which it’s usually not, which is how they make that living, providing convenience.

Both descriptions are off though. Pfhorrest, the function you describe is the function of markets and brokers, which allows buyers and sellers to find each other. You don't need other traders for that.

Traders that don't want to buy (and hold) do bring something to the market as well. They bring liquidity, which lowers risks for every market participant and it ensures the differences of the same stuff between different markets are as minimal as possible. So silver traded at CME is the same price as it is at SME, despite being traded in different currencies and on opposite sides of the world. That means you won't pay too much regardless of which market you or your broker happens to be connected too.

They bring liquidity.. — Benkei

OK, if you want to get technical, traders do offer something. The question though is whether this offering is as I described, "creating the illusion that they are providing you with a service, only to take advantage of you". If this is the case, then they're more like scammers.

What's wrong with different people paying more, or less, for the same product, depending on the circumstances? For instance, if I set out to bake bread and I find that I'm low on milk, I'll zip out to the corner convenience store and buy some milk, at a much higher price than if I went down to the big box. Likewise, when I'm sitting at home in this pandemic, I'll go online and order goods to be delivered in a week or so, and pay more for them, just to avoid having to venture out into the city.

In both these cases, the local store, and the online delivery, someone is providing me with a service, for which I will pay, making the same product cost more. However, the possibility for me to get out and shop around for a lower price still exists if I am so inclined. How does the trader, by making sure that the price is the same everywhere, provide a service to me? Isn't the trader just taking the difference for oneself, thereby bringing the lower prices up to match the higher, and this is the way to the equality which is being offered by this type of trading? Then the person who is willing to do the extra legwork to get the lower prices cannot, because the trader has removed that possibility, by pocketing whatever would normally constitute that difference.

So the trader believes that he is going to make some money. Now what is the service that the trader provides, for which he believes he will get paid? If he's not providing any service, then why should he would get paid? And if he believed that he shouldn't get paid, because he's not providing any service, then he wouldn't be there trying to do "something beneficial for himself". — Metaphysician Undercover

So should people only be paid if they provide services to others? Should winning poker players not be paid? Do you believe gambling should be banned? What about passive income from investment? What about someone who just wants to sell a collectable item?

These don't work as an analogy. The benefit for you as a market participant is clear, you know you're not paying too much thanks to speculators and traders because any price differentials were already arbitrated by them. That's the "service" you're paying them for.

So should people only be paid if they provide services to others? Should winning poker players not be paid? Do you believe gambling should be banned? What about passive income from investment? What about someone who just wants to sell a collectable item? — BitconnectCarlos

Gambling is a known vice, so it is something we ought not do. Whether it needs to be banned, I don't know. Likewise, I don't know if trading needs to be banned, I just identified it as inherently wrong, just like gambling is. Investment is providing something, so I don't see anything inherently wrong with being paid for that. So is selling a collectible object providing something.

The benefit for you as a market participant is clear, you know you're not paying too much thanks to speculators and traders because any price differentials were already arbitrated by them. — Benkei

As I said, it is not clear to me how this is a service. If my analogies don't work, then clearly I don't understand the situation, and simply repeating yourself won't release me from my misunderstanding. How does buying from a trader guarantee that I'm not paying too much? To me, the opposite appears to be true. The trader is an unnecessary middleman getting paid for doing nothing, therefore guaranteeing that I am paying too much. That the trader guarantees I won't pay too much, is just the illusion of the deception which the trader casts as part of the scam. You need to justify this assumption as the truth, to defend the trader.

So is selling a collectible object providing something. — Metaphysician Undercover

Alright so lets say I buy a piece of artwork at $100 and later sell it at $200 - how is that different from someone buying a stock or a commodity at $100 and later selling it at $200? Why is one ok but not the other?

What makes borrowing a stock and selling it any different? It’s not yours, how can you sell it? — Pfhorrest

You're talking about shorting, right? What makes it ok is that all parties in the transaction understand and consent to it. Your broker and who ever is on the other side of your trade understand and agree to what's happening here. If all parties consent, who are we to object?

Imagine the price for gold is 100 USD at the CME and (after currency exchange) 120 USD at SME. And this is weird in a sense because when it really comes down to it, 1 ounce of gold from SME is worth as much as 1 ounce of gold from CME. The price differences are the result of market inefficiencies and in an ideal world without inefficiencies your gold would be 100 USD on either exchange.

Now without a large segment of traders, as a US person you will only access the CME because brokers don't offer any alternative and certainly not at prices that would make sense for a retail investor. Good for you because price happens to be lowest at the CMEbut that's a matter of luck. But if you're a Singaporean, you're being screwed. And for the Singaporean to set up an investment account in the US is also prohibitively complex and expensive.

Here come the traders, driving broker and transaction prices down because they add transaction volume, your broker now sets up lines with both CME and SME because there's sufficient demand to do so, now let's assume they haven't been trading in gold just yet (but silver and copper). You're already benefitting from the market connectivity (well not you, but the Singaporean is since you were fine with just a connection to the CME). So while transactions costs for him will be higher, they won't be prohibitively high and the complexity has been reduced thanks to the work of the brokers.

Next, traders start trading in gold too. The inefficiencies are gone so if the price of SME gold is higher, traders will buy CME gold driving prices up and selling gold at the SME driving prices down. There are no losers here, the trader found a willing seller happy with the price he got at the CME, and they find a willing buyer happy to buy the slightly higher price at the SME. Without these traders, the CME gold seller didn't get rid of his gold and the SME buyer couldn't acquire his gold.

Gambling is a known vice, so it is something we ought not do. — Metaphysician Undercover

Seems like gambling has replaced investing at least with some people. It has become a recreation. Compared to these times, in 1929 things were reasonable.

The whole Gamestop thing tells this: so some naked short sellers got fleeced by pump and dump speculators and people cheer how the evil Melvin hedge fund were overcome by "small investors" and think this was some kind of statement. I don't see anything heroic or great in this: it all just tells how rotten the whole system is.

If Madoff Securities LLC was still active and people would know that it's a ponzi scheme, I guess there would be those carefree people who would still invest in it. Because ponzi schemes create unbelievable gains before they, uh, have no money and the gig is up. But before that, what an opportunity to make money!!!

the evil Melvin hedge fund were overcome by "small investors" — ssu

Just another myth. There were big hedge funds on both sides of the trade.

https://www.wsj.com/articles/this-hedge-fund-made-700-million-on-gamestop-11612390687

Richard Mashaal and Brian Gonick started buying GameStop Corp. shares in September.

They aren’t Reddit day traders or Discord users. They are hedge-fund managers in New York. And when the stock surged from less than $10 a share to above $400 and the dust had settled, they were sitting on a profit of nearly $700 million, one of the great fortunes of the January market mania.

Worth a read. See also:

https://www.zerohedge.com/markets/curious-timing-hedge-fund-made-700-million-gamestop

Many professionals made money going long on GSE. Michael Burry, the guy played by Christian Bale in The Big Short, made a 1400% gain buying GME. Plenty of professionals saw the short squeeze opportunity on a stock with 140% short interest. With short interest that high, professionals and amateurs alike saw that the short sellers would not be able to cover their shorts except at much higher prices.

Remember, a high short interest on a stock or on the market at large is regarded as a bullish indicator. Why? Because every share sold short must soon be bought back. The short interest represents a pool of guaranteed buyers, placing a floor under how far the stock can fall, and serving as rocket fuel if the stock price should start to rise.

Stocks with an extreme level of short interest, however, may be viewed by contrarians as a bullish signal.

https://www.investopedia.com/terms/s/shortinterest.asp

The idea that professionals didn't see the short squeeze opportunity is a myth. The big insiders want to demonize the "deplorable" Redditors. In fact ithe people who should be punished are the hedge funds who conspired to engage in naked short selling, made illegal in 2008 but clearly not enforced, for the purpose of driving an innocent company into the ground and destroying its employees and retail investors. And they were punished, by the market. The GME incident is a beautiful example of the free market in action. Players look at the available information and place their own money at risk, of their own free will, and live with the consequences.

Only our criminal overlords in Congress could have a problem with that. And the hearings will be presided over by Janet Yellen, who took $800k in bribes -- err, speaking fees -- from Citadel, and who in October promised to recuse herself from matters like this, and has just broken her "ethics" promise. This is the kind of corruption people are sick and tired of living under.

https://www.reuters.com/article/us-usa-treasury-yellen-gamestop-exclusiv/exclusive-treasurys-yellen-calls-top-regulator-meeting-on-gamestop-volatility-consults-ethics-lawyer-idUSKBN2A306A