Smarter Money: Don't Be a Leverage Junky

Leverage attracts junkies. They can't stay away from it. Even in the mutual fund world.

People should learn to kick the habit. We rarely use leverage at Cramer Berkowitz because we know its hazards: Mainly, it puts a gun to your head and makes for some awful investment decisions. We don't like to think that we can always get it so right that we should be attempting to double our returns through leverage every day.

Periodically, when we have a great feel or a great call, we will deploy borrowed capital or put money in puts or calls that could lead to an outsized investment -- if it goes right. ...