Warren Buffett tells the story of his brilliant friend Rick Goren, who was wiped out by margin calls because he was "in a hurry." Buffett's lesson: If you are an even slightly above-average investor who spends less than you earn and never uses leverage, you are almost guaranteed to get rich over a lifetime.

Wealthy people don't avoid debt; they use it as a tool called 'leverage'. They borrow money at a low interest rate to invest in assets that generate a higher return, effectively profiting from the spread.

Leverage is attractive on the way up but brutal on the way down. Its true danger isn't creating new risk, but eliminating any room for error in an investment thesis. This lesson is repeatedly and expensively learned by each new generation of investors, as seen in recent market collapses.

Chamath Palihapitiya recounts nearly losing everything due to a massive credit line that collapsed in value during a market downturn. He warns that using debt to "run the number up" is a common trap for successful people, violating the simple rule of avoiding debt to maintain stability.

A major wealth preservation strategy for the ultra-rich is borrowing against their appreciated public stock. This provides them with massive, tax-free cash liquidity for living expenses or new ventures, without ever triggering a taxable event like selling the stock.

The wealthy don't sell appreciating assets like stock to fund their lifestyles; they borrow against them at low interest rates. This "Buy, Borrow, Die" method avoids triggering capital gains taxes, allowing wealth to compound tax-deferred and widening the gap between asset owners and wage earners.

Gambler Edward Gilbert used leverage to fund his stock market plays. When the market turned, margin calls forced him to sell at the worst possible time, turning a manageable stock drop into a catastrophic loss. Leverage removes the option to wait out volatility, destroying sound investment strategies.

While low rates make borrowing to invest (leverage) seem seductive, it's exceptionally dangerous in an economy driven by debt management. Abrupt policy shifts can cause sudden volatility and dry up liquidity overnight, triggering margin calls and forcing sales at the worst possible times. Wealth is transferred from the over-leveraged to the liquid during these resets.

Ackman debunks the trope that the wealthy borrow against assets. He warns this exposes investors to margin calls during downturns, forcing sales at the worst time and destroying long-term compounding, citing Carl Icahn as an example of the risk.