Charlie Munger once warned that there are three ways smart people go broke: alcohol, women, and leverage. In the investment market, the common types of leverage include: ◦ Tool leverage: options / perpetual contracts, etc. ◦ Structural leverage: like 3x long Nasdaq TQQQ ◦ Debt leverage: using mortgage loans / credit card cash advances / private financing to invest ◦ Invisible leverage: putting 30% down to buy a house and carrying a 30-year mortgage ◦ Combined leverage: having a mortgage, using years of personal savings to start a business, running out of money, and planning to take out a bank loan to keep the business going. This last type of combined leverage is the real situation of a classmate I met during the Spring Festival. Most leverage is essentially overdrawing your margin for error. Once your funds and timing are out of sync, it can be extremely fragile.