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how would she have done buying Berkshire with leverage? it's not the leverage that's the problem of disaster but which asset is used to collateralize it.

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I’d have to look at the price data to figure her largest drawdown but of course Berkshire has had 50% declines several times. Using leverage would, at the very least, made it harder to hold psychologically and could have shaken her out of the stock even absent a margin call.

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"Truly horrific investment mistakes are usually the result of leverage, either applied directly by the investor using margin, or embedded within the capital structure of the companies that are purchased."

So true!

All in all, a great piece.

"Her “mistake” is a mere footnote in the history of her life."

Quite consoling. A blip on a chart. I overpaid for ASML in 2021. But the footnote in the history of my life will read that having overpaid for a monopoly (which it will remain at least until 2025 by most pessimistic estimation, and for ten years more by optimistic ones) was only a slight error to make. And a priceless lesson on top of that.

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Nice job dude. That was a fun read.

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Feb 4, 2023Liked by The Rational Walk

Outstanding piece. Thank you!

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