yl explains leverage

Nowadays with the financial crisis in full swing, talking about finance very in. Newspaper, newsweek all saying the same things. Like why part A of the economy sucks, why part B of the economy sucks, that's why everybody suck thumb. That is now la. Not so long ago, i read this column by a financial expert in newsweek say the drop in stock prices is just a 'short-term correction', cheemology for singing "if we hold on together, I know our dreams(of getting rich) will never die". Now become 'if we hold on to the stocks together, all of us will die together'. There's so many explanations for why the whole financial crisis happen, but i think those reporters just pangsai out something to make a living la, regardless of whether they actually know what's happening or not, unlike me cannot make any money writing. Actually, whether you understand the financial crisis or not also doesn't matter, because you also cannot do anything about it. Even the people who are doing something about it also don't understand it, so no point, end up just fight. But i just want to explain what is leverage for fun.

Leverage is simply borrowing, like how companies on Wall Street borrow to make money (and now lose money). But let me illustrate this with an example everyone can relate to, at the same time teach you all some survival skills.

Let's say you got no money. But you're hungry, so you go to Macdonald's. You look around, and you spy someone who has just bought an extra value meal. You think, where does that extra value go to? Must be for me la. So you approach that someone, and ask in your most charming way, can I have a few pieces of your fries? Smitten, the person says yes, albeit reluctantly. With that legitimate piece of consent, you turn into a food monster and grab half of the fries, and put it on another tray which you have koped earlier on. But you're not done yet. You also grab the fries container from the shocked someone's tray. Finally done with the food rape, you remember what your mama told you and say 'thank you'. (I believe investment bankers are polite people too) Now the proud owner of half a packet of fries, is it time to enjoy the fruits of someone else's labour? Not so fast. You have to be hungrier than that! Instead, you don't touch the half packet of fries and you head towards the cashier with it. You say in a polite voice, "Excuse me, I think the fries are overcooked." You eyeball the cashier and maintain a solemn face as he gives you his WTF expression. If you sense resistance, or some tension, you go for the jugular and say, "Yes, it's overcooked, would you like to try some of it?" At this point, in all probability, the cashier will give in and give you a whole new packet of freshly-ccoked fries. It's not his store after all. He's just a poor cashier forced to deal with hungry psychotic people. He'll give anything to make them go away. Now what you do next really depends on your level of greed. You could eat your fries, though thats too easy for you. Or you could divide your fries, kope another fries container from the dustbin or someone else and repeat the steps, thereby getting you 2 packets of freshly-cooked fries. And the process could go on. Then you can sell macdonald's french fries outside macdonald's for half the price! Or you can graduate to leveraging burgers instead of/and fries. Man the possibilities are endless!

(Based on a true story)