I have a bunch of emails asking exactly why or how leverage can be excessive and opaque. Here's the deal: when we charge on a credit card beyond what we can pay back without interest we know (or should know) that we have a problem. That is because if we cannot pay back $100 we will have to earn $200 just to break even. We have leveraged our future. Keeping this as simple as I can, let us say we purchase a $500k property that we borrow (leverage) $400k to execute. THEN we use the property as collateral to buy a one million dollar corn farm in Iowa for 100K down using the already leveraged property. Just in this simple example, what is our real value? Our "model" might say the value is $1.4mil, or it might say it's $1.2mil, no matter what we say the value is, the real value is now hidden behind a "leverage" wall. This leverage can be extended out to purchase and sell fifty or so properties and we will never know the exact value.....until somebody somewhere misses a payment on something we have leveraged. See the problem? It is this failure to completely disclose that is the root cause and it is exactly the same as was Long Term Capital Management's, a failure that our glorious regulators said they repaired but did not.