Contract leverage can wipe you out, remember that!

Recently, I received many private messages and found that many friends are asking: “The market is so good now, can I add contracts in the crypto and stock markets to trade in the crypto and stock markets?” Some readers even excitedly said they made a 50% profit using margin trading accounts. Every time I see these messages, I can’t help but break out in a cold sweat. Today, I must thoroughly clarify this topic — crypto and stock market contracts are definitely the “deadly poison” of the investment world.

Many people still think of crypto and stock market contracts as a beautiful “money-making with borrowed funds” dream. As Buffett said: “When you make money with crypto and stock market contracts, your wife will think you’re smart, and your neighbors will envy you.” This feeling of floating on air is like drinking a strong liquor, making you instantly intoxicated.

I have a friend who tasted success during the 2015 bull market. At that time, he used double leverage in crypto and stock market contracts to buy brokerage tokens, and his account doubled in just three months. During that period, he walked with confidence and posted profit screenshots every day on social media. But when the crypto and stock market disaster struck, his account was forcibly liquidated in three days, losing all profits and owing the bank tens of thousands. Now, at every gathering, he laments: “Crypto and stock market contracts are like drugs; once you get hooked, it’s hard to quit.”

Many believe they are smart enough to fully retreat from the crypto and stock market contract game. But the reality is, any small mistake can lead to irreversible consequences. During the 2008 financial crisis, Lehman Brothers held 30x leverage in crypto and stock market contracts on subprime debt; just a 3% drop in housing prices would wipe them out. What happened? This 158-year-old financial giant went bankrupt and was liquidated during the subprime mortgage crisis.

Even more brutal is that crypto and stock market contracts amplify market volatility. Suppose you have 1 million in principal and buy a crypto and stock market contract with double leverage. If the market drops 20%, your principal becomes only 400,000; another 20% drop reduces it to just 80,000. At this point, you’ll find yourself trapped in a vicious cycle of “losing more and panicking more, then adding more positions.”

True investment masters regard crypto and stock market contracts as a flood and a beast. Buffett’s Berkshire Hathaway always keeps $20 billion in cash on hand. Lin Yuan once refused to add to his crypto and stock market contracts when Maotai’s price halved, saying: “I can’t let any unexpected event affect my sleep.” Even Duan Yongping bluntly said: “Crypto and stock market contracts are like picking chestnuts from fire; even if you succeed ninety-nine times, the last time will leave you with nothing.”

The core of value investing is “margin of safety,” but crypto and stock market contracts are precisely destroying that safety margin. When you borrow money to invest, short-term market fluctuations become a test of life and death. It’s like walking a tightrope with an elephant on a rope; any small gust of wind could shatter you.

Build a “safety cushion” mindset: always keep at least three years’ worth of living expenses as emergency funds. The money used for investment must be “money that won’t affect your life even if lost.”

Replace with a “reverse crypto and stock market contract” mindset: instead of borrowing to invest, focus on increasing your income. Buffett’s annual float income from GEICO insurance is essentially a “zero-cost crypto and stock market contract.”

Extend your investment horizon to ten years: when you view problems with a ten-year perspective, short-term fluctuations become insignificant. Just like planting trees takes time, wealth accumulation also requires patience.

Recently, I saw many young people mortgaging their houses or borrowing consumer loans to trade in crypto and stock market contracts. Every time I see such news, I think of Munger’s words: “If I knew where I would die, I would never go there.”

The essence of investing is to exchange time for space, not to exchange crypto and stock market contracts for speed. Stories of getting rich quickly through crypto and stock market contracts often end up as gossip for others. Remember: true wealth accumulation must be steady, clean, and solid.

**$VIRTUAL **$TNSR **$SAGA **