I learned from this that even though I was right in my economic analysis I hadn’t properly evaluated the risk of too much leverage. For a few thousand dollars I learned from this to make proper risk management a major theme of my life for more than fifty years thereafter.
Leverage. Warren Buffett:
"When leverage works, it magnifies your gains. Your spouse thinks you're
clever, and your neighbors get envious," explained Buffett in his 2010
shareholder letter. "But leverage is addictive. Once having profited
from its wonders, very few people retreat to more conservative
practices. And as we all learned in third grade — and some relearned in
2008 — any series of positive numbers, however impressive the numbers
may be, evaporates when multiplied by a single zero. History tells us
that leverage all too often produces zeroes, even when it is employed by
very smart people." - https://www.usatoday.com/story/money/markets/2014/01/19/how-warren-buffett-uses-leverage-to-invest/4638423/
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Brian
