“Leverage is receiving something you have not yet earned”
Each of us has to pay our dues. Put in the work. Earn it. There is no easier softer way.
Most people on here idolize Warren Buffett and Charlie Munger. Most want to build the next Berkshire. Most just want to do it faster. Not many are willing to put in the 60+ years it took.
Adding leverage is the simplest way to get from point A to point B, fast. There are two problems with leverage:
Point B may be ruin, as leverage creates a more fragile system.
Even if point B is success, you get there too fast and have not earned it.
I have written about the first point. The fragile nature of too little cash and too much debt.
But the second point is often overlooked. If the play works and the leverage gets you the riches and success, did you really earn them? If they were lost, could you do it again? Do you have the foundation to manage that success? When you inevitably get punched in the face, will you know how to handle it?
I have had some miserable setbacks on this road to building our HoldCo. I am in one right now. But with each setback, I eventually looked back with gratefulness. Each setback builds the foundation and character to persevere. To get through the next inevitable setback.
Each setback teaches lessons that will be necessary to handle some future calamity.
If you race to the finish line, you must be careful of not only blowing up along the way but of not having the knowledge and scar tissue to handle what comes next.