A bear market is a negative decline in the market, and in the process of every negative fall, many people will be harmed, some people will not think about it, and some people will go to close the account! And most of these people are self-leveraged and can't bear the results given by the market.
Berkshire has been able to maintain its success, on the one hand, it never increases leverage, for an individual investor, it will only increase personal risk, and for Berkshire it is completely unnecessary, because Berkshire has long-term stable funds**. On the other hand, Berkshire keeps 1 3 cash reserves forever, and for an investment company, only if it has cash in hand, it can only survive a bear market.
In the past ten years of investment, my understanding of leverage has always stayed at the interface of harming others and myself!
First of all, leverage will not improve your judgment ability, that is, it will not strengthen your win rate, you buy 10,000 yuan and 1 million yuan, your judgment ability does not improve, but only strengthens the profit and loss results, if you judge wrong, you will lose more, you judge correctly and only make more money to win bets, but you must know that we are not able to judge the future, what is a bull market? The bull market is the overall trend of the market, but it is not rising all the time, it is rising in turns, you can't be sure when it will end, the trend is a day to fold, and there is no way to determine what companies will have black swans.
Secondly, we often say that the bull market is more, the bear market is more yin, if the leverage is too full, it is very likely that a big ** will pass the liquidation line, at this time there will be a scene of losing all the plates, this situation as long as you meet once in a lifetime, basically can not turn over, remember, we are here to do investment to see the valuation of the enterprise, not to gamble, even if it is a very cheap valuation do not to increase leverage, just like Keynes said: the market continues to be irrational for a longer time than you hold on to the bankruptcy. Look at the previous bets on Moutai** leverage, how many people disappeared without a trace, not to mention that there are few companies that are better than Moutai.
If you consider investment as gambling, and speculate in the market by leveraging margin financing and securities lending with the mentality of taking a chance, then you will definitely not make any profits. Margin trading was established to increase the liquidity of the market during the Great Depression, giving individual investors 1 or more times their own funds to invest. This method will only bring greater risks to oneself and will not do any good, so I have been saying that margin trading harms others and oneself!
If the "you" who see this article is an investment novice, then I want to remind you that investing is not as simple as you think, it is more difficult than any industry, earning experience, earning accumulation, is a kind of cognitive realization, do not use borrowed money**. If you want to really invest, first of all, your funds can be guaranteed to be dispensable in the next five or ten years, even if you lose this money, it will not affect your life. Secondly, never increase leverage, be down-to-earth, you get what you pay for, you can do as much as you can, and increasing leverage will only increase your risk.