Quick basic physics lessons in case you forgot since school. A lever is a simple machine consisting of a beam pivoting on a fulcrum. If the lengths of the beam on each side of the fulcrum are equal you translate equal force, so pushing down with 10lbs would lift up 10lbs on the other end. But by lengthening the lever on one side, you can multiply the force many times. Pushing down with 10lbs of force on a long lever could lift up 100lbs on the other side.
Archimedes famously said, “Give me a lever that is long enough, and fulcrum on which to place it, and I shall move the world.”
In finance leverage borrows this idea of multiplication of force but the application is slightly different. Leverage is essentially using debt to increase returns. So for example if with $100 you can borrow $1000 and double your money by investing it, you walk away with $1000, or a 10X return after you’ve paid back the $1000 you borrowed. Using leverage you turned a 2X return into a 10X return. Of course, if you lose the money you’re still on the hook, so leverage is very dangerous.
Leverage, along with optionality which I will discuss another time, is one of the core concepts I live my life by and I want to explain to you how it applies to life and why I think it’s so important to you.
A big picture way to think about leverage is in terms of how much force or energy you need to apply to effect a change. High leverage requires low energy input. Keep this in mind.
Making changes to the way we think is an extremely low leverage pursuit. Think about the years of therapy required to rewire the brain from trauma or to change deeply ingrained behavioral patterns with cognitive or psychotherapy approaches. It’s a slow process because we have very little leverage over the way we think.
This is where physical culture comes in. The leverage you have over your physical vessel is massive, direct, and concrete. If you dedicate an hour three times a week to physical training you will see changes. If you work on getting stronger, you will get stronger. You can exert massive leverage with relatively minimal effort. (With apologies to anyone who may not have full ability to affect their physical vessel.)
You may not be able to easily change your brain directly, but you can definitely change your body directly.
And by changing the body, you change the brain. And the leverage is multiplied even further.
Being physically stronger enables you to be mentally or psychologically stronger, not least because the body and mind is the same thing.
You know what one of the absolute most common things I hear from clients and gym members is? Some variation of “I never knew how much getting stronger would change the way I feel and show up in the world.” And then they go on to make other changes they were formerly unable to make for years upon years.
Leverage is why physical culture is the starting point, the very foundation of self improvement. This isn’t some meathead pursuit that is about vanity and bigger muscles or bragging about strength personal records. This is very literally the highest leverage thing you can do with your time to improve your life.
My question to you is, where else do you see leverage?
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