The Memo by Howard Marks cover image

The Impact of Debt

The Memo by Howard Marks

NOTE

Optimizing Leverage in Investing

Determining the proper amount of leverage in investing should focus on optimizing gains, not maximizing them. While leverage can amplify gains, it also magnifies losses and poses a risk of ruin during extreme negative scenarios. Therefore, investors should typically use less than the maximum available leverage. Successful investments combined with moderate leverage often yield satisfactory returns. It is crucial to be cautious and use leverage only with careful risk considerations.

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