Leverage Like a Legend: Warren Buffett's Japan Gambit and Lessons for Investors
Dalal Street Investment Journal|April 08, 2024
Imagine turning a billion dollars into twelve, all without risking a dime of your own. Sounds like financial fiction, right? But that's exactly what investing guru Warren Buffett pulled off with his audacious bet on Japan. In this special story, Vaishnavi Chauhan dissects the unconventional strategy Buffett employed to leverage borrowed money and generate sky-high returns in the Land of the Rising Sun.
Vaishnavi Chauhan
Leverage Like a Legend: Warren Buffett's Japan Gambit and Lessons for Investors

Investing is like planting seeds in a garden with the hope that they will grow into healthy plants over time. When you invest, you're putting your money into things like stocks, bonds, real estate, or other assets, hoping they will increase in value in the future.

When it comes to investment strategies, leveraged investing stands out as a method that offers the potential for amplified returns, although with increased risk. This strategy involves using borrowed funds to magnify the scope of your investments, allowing you to control larger assets with a smaller initial outlay of your own capital. While leveraged investing can enhance profits when executed judiciously, it also heightens the exposure to losses if the market moves unfavourably.

Case study:

Debunking Warren Buffett’s ingenious Japanese bet

When we talk about superstar investors, one name stands out is Warren Buffett. One of his standout moves is investing in Japan.  But what exactly was his move. Let's have a look:

On his 90th birthday in 2020, Berkshire Hathaway announced a significant move, the acquisition of more than a 5 per cent stake in five prominent Japanese trading companies: Itochu, Mitsui, Mitsubishi, Marubeni, and Sumitomo. What made this investment particularly intriguing was Buffett's unconventional approach – he didn’t use any of his own capital for this venture.

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