Leverage Build Up

“Leverage,” in business terms has a couple meanings. It can mean a certain advantage in negotiations...like, “we’ve got leverage on this guy because of those pictures we stole from his cell phone.”

It can also mean the accumulation of debt...raising cash through borrowing so you can invest the money somewhere else. Borrow at 8% so you can make a 12% return somewhere else. That definition applies to the term “leverage build up.”

The idea here is that you add to your debt load so you can invest that money elsewhere. You see a great opportunity in Russian sovereign debt. You want to buy as much as you can...sky's the limit. So you start a leverage build up strategy.

You keep borrowing more and more money. You mortgage your house. You take out a personal loan. You ask your Aunt Heather for whatever dough she has hidden under her mattress. Each time you get a loan, you immediately turn that cash into more Russian debt. Leverage build up.