Part 2/9:
Leverage is a critical aspect of investing that significantly impacts profitability and risk. In its simplest form, leverage refers to borrowing money to invest with the goal of amplifying returns. In the stock market, one might borrow money from a bank, typically at a 1:1 ratio, to double their investment potential. For example, having $100,000 could allow an investor to borrow another $100,000, giving them a total of $200,000 to invest. However, if the investment experiences a downturn of 50%, they wouldn't just lose their initial investment; they would find themselves in debt if the asset is sold off to repay the loan.