Thread by @XDays

LEVERAGE THREAD

Warning, not for 99% of readers or the faint of heart.

If you like risk and are comfortable with the possibility of getting financially destroyed, read on.

Also, everything here is entertainment only.

Consumer debt is for idiots.

I have relatives who take out car loans so they can show off to their fellow non-executive coworkers at the job they'll be stuck in forever.

Peak stupidity.

Leverage, AKA rich man's debt, is what you use intelligently to juice your gains and buy more equity than you can currently afford.

Done right, you actually make money on your debt.

The Du Pont cousins each paid $700 to buy their family business, and they put the remaining $21 million price tag on credit.

Robert P. Smith, founder of Turan Corporation, built his fortune off "credit spreads." He borrowed money at low interest, buying high interest yields.

Sam Zemurray levered up so much he ended up borrowing from the mafia. And Jakob Fugger put himself into coin flip situations where he could have lost it all.

You don't have to be this extreme, but leverage does have a long track record of turning ambition into wealth.

With the current threat of hyper-inflation, plus historically low interest rates, here are some opportunities to consider.

OBVIOUSLY NOT LEGAL ADVICE, but here are a few ideas.

Stocks on reasonable margin IF there's a dip and if you're buying a quality company.

Personally, I did this when AT&T dipped under $30. I bought 300 shares at a margin rate lower than the annual dividend payout. This means the cash flow is higher than the loan interest.

You obviously want to pay margin off, and you need some investing experience before using it, but it is a way to "buy the dip" without leaving tons of cash in a 0% interest savings account.

ADDITIONALLY, don't use margin on fairly priced or high priced assets.

This will be mentioned again later on (because it is important), but borrowing money to buy assets at the peak is how people get wiped out.

Use margin sparingly and only buy assets if there's a discount.

Buying property is another obvious way to use leverage. Lock in a good mortgage and you're making money from property appreciation (and rents) while also saving money via on-going dollar depreciation.

Crypto dips can also be a good leverage opportunity.

Like stocks, don't overleverage. And don't buy garbage no name coins.

Also, don't buy at the peak.

If Bitcoin falls by 50% and you have $100,000 in portfolio value (and steady income to pay down debts), leveraging $5,000 - $10,000 isn't a huge risk.

Taking out a mortgage to buy peak $20,000 Bitcoin, on the other hand, is stupid.

Buying Bitcoin or Ethereum at a discount and putting them into an interest generating account like BlockFi

blockfi.com/?ref=17d5f937 (Referral Link)

Allows you to earn monthly payouts and capital appreciation.

Next one, credit cards.

Don't keep a balance, but having one or two cards with different due dates allows you to make purchases and enjoy 25 - 30 days before you pay the bill.

This is a great way to take advantage of opportunities without having cash immediately on hand.

Last thing to mention, luxury goods as a hedge against inflation.

Buying quality goods that last a lifetime is often cheaper now than tomorrow.

This does not mean purchasing $300 plastic flip-flops or a designer t-shirt, but means buying something timeless and built to last.

My grandparents each have custom coats they bought 30+ years ago. Both jackets still look pristine and would probably cost 10 times as much today.

Put another way, you can buy something that costs $700 today, beat inflation by never having to get another one at a later date when it is more expensive, and never need a replacement.

See "Boots Economics"

wiki.lspace.org/mediawiki/Sam_….

In conclusion.

Leverage is not for everyone and avoid "lottery ticket mindset."

If you are smart, and willing to take some calculated risk, this is an excellent way to maximize your returns.