I briefly mentioned the possibility of using leverage to achieve a higher return in one of our last post – Red Red Market for Chinese New Year! Coincidentally, a week after my post, I began to see Warren Buffett’s articles on social media about the danger of it. lol.

Let me list a few if you have not come across them:
– Buffett, quoting partner Munger, says there are three ways to go broke: ‘liquor, ladies and leverage’
– Buffett has one big investing lesson in this year’s annual letter: Never borrow money to buy stocks

Look at how creative the titles are, maybe I should rename the article to “KPO decides to use leverage despite Buffett’s warning”. Hahahaha. Interestingly, for those that are unaware, Warren Buffett uses leverage too – Explaining The Secret Of Warren Buffett’s Success: Double Leverage :)

Leverage is dangerous for many reasons. As one of Chinese saying goes, 没那么大的头,就别带那么大的帽子. The literal translation is “if you do