📖Duan Yongping
Avoid Leverage
Never use leverage; it turns temporary setbacks into permanent capital loss.
Never use leverage in investing. Leverage can turn temporary setbacks into permanent capital loss. The tortoise beats the hare by staying in the race.
🏠 Everyday Analogy
📖 Core Interpretation
Leverage introduces existential risk that can end your investing career
💎 Key Insight：Duan is adamantly opposed to leverage in investing. Borrowed money magnifies downside risk and can force sales at the worst times during market panics. Even great investments experience volatility; leverage can wipe out an otherwise sound portfolio. Investing without leverage ensures survival and allows patience to wait for recovery. Preservation of capital is paramount.
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❓ Why It Matters
Duan has never used margin or leverage despite having high-conviction ideas
🎯 How to Practice
Use only capital you can afford to lose; never borrow to invest
🎙️ Master's Voice
A business that needs to be constantly managed and fixed is not a good business.
Duan prefers businesses that run smoothly without constant intervention. A great business should almost manage itself. If it requires constant firefighting, it is not a good investment.
⚔️ Practical Guide
✅ Decision Checklist
- Does this business run smoothly?
- Does it require constant management attention?
- Would it succeed with average management?
📋 Action Steps
- Look for self-sustaining businesses
- Avoid businesses requiring constant turnaround
- Value operational simplicity
🚨 Warning Signs
- Businesses requiring constant fixing
- Heavy management burden
- Operational complexity
⚠️ Common Pitfalls
Equating volatility with all forms of risk
Oversized positions without an exit plan
Using leverage to compensate for uncertainty
📚 Case Studies
1
Asian Financial Crisis Margin Calls (1997)
Highly leveraged investors in Asian equities faced margin calls as currencies and markets collapsed, forcing them to liquidate at lows.
✨ Outcome：Duan Yongping highlighted the episode as a warning that leverage can turn temporary volatility into permanent capital loss.
2
Global Financial Crisis and No-Leverage Stance (2008)
During the 2008 crisis, leveraged funds and investors were forced sellers when credit markets froze and collateral values plunged.
✨ Outcome：Duan’s insistence on avoiding leverage allowed him and followers to hold quality assets calmly and benefit from the eventual recovery.
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