Leverage: Difference between revisions

Not only does leverage not mean “use”; it isn’t even a {{tag|verb}}. It’s a {{tag|noun}}: it describes the effect of using a lever on a fulcrum. “Lever” is also a {{tag|noun}}, though you could at least use that as a {{tag|verb}}. But you would sound stupid:

“Leverage” – or “gearing” – came into the lexicon courtesy of the bankers. It properly describes the effect of borrowing money to invest: If you have ten pounds and you invest it, you get ten pounds’ worth of return. If you borrow ninety, add it to your ten and invest the lot you get one hundred pounds’ worth of return. ([[Buzzword]]) bingo: you’ve created ten times “leverage” (note: still a noun) on your original investment. When the market goes up, leverage makes you look like a hero. When it goes down, it takes your shirt with it.