Charlie Munger Said Smart Men Go Broke From 'Ladies, Liquor, And Leverage'—But Warren Buffett Says Only One Of Those Will Actually Take You Down

Core Insights - Warren Buffett emphasizes that leverage is the primary risk that can lead to financial ruin, overshadowing other factors like personal indulgences [2][3] - Historical evidence suggests that while leverage can create wealth, it often results in significant losses, even for intelligent investors [4] Group 1: Leverage as a Risk - Buffett highlights that leverage, or borrowing money to amplify gains, is the real danger that can affect anyone regardless of their intelligence [3] - In a 2010 letter, Buffett noted that leverage frequently leads to disastrous outcomes, stating that it often produces zeros even for smart individuals [4] Group 2: Personal Experiences and Caution - Charlie Munger reflected on the missed opportunities for Berkshire Hathaway due to their cautious approach to leverage, suggesting that they could have doubled their worth with minimal additional risk [4][5] - Munger's personal history, including financial struggles after a divorce, shaped his cautious stance on using borrowed money, emphasizing the importance of trust from shareholders [5]