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Why rich people go broke

Warren Buffet once said that he had seen more people fail because of leverage. Leverage means borrowed money to increase your income. He commented one really do not need this kind of borrowed money leverage if one is smart. A smart man will make a lot of money without borrowings.

One inspiring philosophy is obvious when he said that he would not be way happier when he had 2x instead of x.

"Why smart people do dumb things exactly answers this question". Financial success can breed its own set of vulnerabilities.

Another important principle of behaviour I like is :
"models of investor overconfidence predicts that men will trade more and perform worse than women." This principle is consistent with my general observation that man play to win whereas woman play not to lose.

Think about it. There are lots of wisdom behind the scene.

posted by DR SOON @ 5:29 AM