A question that comes up every time stocks look cheap is whether it's a good idea to refinance your home mortgage for cash to scoop up bargains.
The idea is bargain stocks will eventually rise in value at which time the investor can cash out for a profit or reinvest in more stocks or even put some of the money back into the mortgage (pay down the principal).
Sounds like a great plan except it doesn't always work out that way. Anyone who has watched the stock market for any length of time can spot periods when this would have been a terrific plan.
Backward looking examples, almost always start out with "if you had bought Apple, Microsoft or some other industry giant when they were much smaller and cheaper." We are all investing geniuses when looking in the rear-view mirror.
Likewise, it wouldn't be hard to remember a time when real estate was almost guaranteed to rise in value (at least in some markets). However, the real estate market, like the stock market has proven it is not immune to crashes.
So, when you combine the risk of investing in stocks (no matter how cheap they may seem at any point in time) with a real estate market that has proven vulnerable to boom and bust cycles, the result is not pretty.
Taking money out of your house (refinancing) when values may rise or fall is a bad idea under almost any but the most dire circumstances (medical emergency, for example). Putting that cash into the stock market, which may rise or fall in value compounds your risk.
If you want to invest in stocks, do it the old fashioned way: save your money or start a program of regularly investing (monthly, for example) comfortable amounts. Leave the high-rolling schemes for people who can afford to lose the money, because most of them probably will.
