"Leverage? What is leverage?"
"Is this... some kind of Law Artifact?!"
Upon hearing what Lu Li said, Xu Xiong immediately listened attentively, not wanting to miss a single word.
Seeing Xu Xiong's interest, Lu Li smiled slightly and explained.
"Leverage is not a physical Law Artifact, but rather a tool... or perhaps a means of Dao of Money manipulation."
Simply put, it's about using minimal force to move a large object.
"A mortal can lift a huge rock with just a stick and a fulcrum."
"We who cultivate ourselves can also accomplish our own goals by borrowing the strength of others."
Seeing that Xu Xiong seemed to understand but not quite, he gave an example.
For example, someone might want a spirit herb worth a thousand Spirit Stone, but only has a hundred Spirit Stone on hand, which is unaffordable under normal circumstances.
However, if one uses Spirit Stone as a deposit or down payment to borrow nine hundred Spirit Stone from someone else, with the agreement to repay one thousand one hundred in the future.
They obtained this spiritual herb ahead of time.
With only one hundred Spirit Stone as capital, one can make a deal worth one thousand Spirit Stone; this is leverage.
With a small amount of his own Spirit Stone, he leveraged resources worth ten times their value.
If I can use this spiritual herb to break through my cultivation level, I can better repay my debts. This is called leveraged investment feedback...
Xu Xiong's eyes lit up, as if he had opened the door to a new world.
"This... this is like getting something for nothing! No, it's like using someone else's resources to make something out of nothing!"
Lu Li nodded approvingly.
That's exactly right.
"The key is that you're sure that the spirit herb can be resold for 1,200 Spirit Stone."
"Or it could be used to refine more valuable elixirs, or perhaps to enhance one's strength."
"So even after paying interest, you still make a huge profit."
"Conversely, if you misjudge and the medicinal herb is only worth eight hundred, you will not only lose all your principal but also incur debt. This is the danger of leverage... both returns and risks will be magnified."
He paused, then continued to delve deeper.
Try to explain it as clearly as possible.
This principle can be extended to other situations. If one has ten thousand Spirit Stone and cultivates step by step, they will eventually be used up.
If you use this as capital to borrow 90,000 Spirit Stone from trusted fellow disciples or Lineage, you will have 100,000 Spirit Stone in capital.
They can do bigger deals, and profits will naturally multiply.
One could even... establish a money exchange for spiritual practitioners, attracting low-interest deposits and then lending them out at high interest rates to profit from the interest rate spread... The intricacies of this are as deep as the ocean.
Lu Li and Great Xia had long ago discerned the primitive nature of this world's financial system.
Individual cultivators possess great power that resides within themselves, and they are accustomed to killing and plundering or relying on sects and Lineage for supplies.
The application of the financial logic of making money from money is extremely crude and riddled with loopholes.
If these vulnerabilities can be cleverly exploited, coupled with accurate information and a certain level of military support...
The resources that can be leveraged will far exceed ordinary people's imagination!
After hearing this, Xu Xiong was captivated, his breathing quickened, and he pressed for more information.
"Senior brother, besides this lever, are there any other ingenious methods?"
"For example, how can we make people more willing to lend money... Spirit Stone? Or, how can we mitigate the risks?"
Lu Li was impressed by Xu Xiong's high level of comprehension.
My assessment of his Dao of Commerce acumen rose even higher, so I continued teaching:
"Of course."
"Firstly, there is the matter of credit. You need to establish credibility with people, letting them know that you always keep your word, that you repay what you borrow, and that it will not be difficult to borrow again."
Building trust requires perseverance.
Secondly, diversify your risks; don't put all your eggs in one basket.
"If you lend money to ten people, even if one defaults, the other nine will still benefit, so overall you won't lose money."
This is the risk-sharing effect.
"Furthermore, there's the effect of compound interest."
Lu Li's gaze was deep.
What mortals commonly refer to as "interest on interest" is just as effective in the Immortal Realm of cultivation.
I borrowed 100 today, and agreed to repay 110 tomorrow.
If you don't repay by tomorrow, interest will be calculated at 110 yuan the day after, and you will need to repay 121 yuan...
As this accumulates over time, the profits become increasingly staggering.
The power of compound interest is arguably one of the most powerful forces in the world.
He casually took out a Jade Slip and quickly drew a curve showing the compound interest growth.
The exponentially rising lines made Xu Xiong's scalp tingle.
"There's also an information gap."
"I know that the price of spiritual grains in a certain place is about to rise, but you don't. This allows me to buy them in advance at a low price, hoard them, and sell them at a higher price."
Those who control information control the opportunities for wealth and the relationship between supply and demand.
"Scarcity drives up value. By monopolizing the supply of automatic Pill Furnace, we create a supply shortage, allowing us to set the price."
"By the time followers appear, the market becomes saturated, and prices fall, we may have already made a fortune or developed a new product."
This is the law of supply and demand in the market.
As he spoke eloquently, Lu Li explained the economic principles of another world, which had been refined through countless trials.
Using the simplest and most straightforward examples and vocabulary that this world can understand, I explained everything to Xu Xiong one by one.
Xu Xiong would sometimes suddenly realize something, and sometimes ponder deeply.
If there was anything they didn't understand, they should ask immediately, and Lu Li would patiently answer them.
Xu Xiong became more and more excited as he listened.
The vague concepts about Spirit Stone, trade, and resources that were originally in my mind were sorted out into clear and logical terms by these novel and powerful "theories," and I suddenly understood.
His Spiritual Power began to circulate actively, causing his dantian to surge.
The bottleneck in his Foundation Establishment that had been holding him back for so long was now showing signs of trembling!
His voice trembled with excitement.
"Senior brother! These... these methods are practically comparable to supreme Daoist arts!"
"If used properly, how can resources be lacking, or the great path not being achieved?"
Lu Li was increasingly surprised as she looked at the peculiar aura that flowed around him, so different from ordinary Spiritual Qi.
Legend has it that Dao of Commerce is a form of spiritual cultivation, where wealth accumulates to communicate with the divine, and profits are used to sustain one's spiritual practice... It seems this saying is indeed true.
Xu Xiong might actually succeed by taking this unconventional path.
He patted Xu Xiong on the shoulder and said meaningfully.
"The method has been taught; whether you can comprehend it and apply it effectively depends on your own fortuitous opportunity and courage."
"Remember, the key to its application lies in one's own mind."
"Wealth can carry the spirit of righteousness, but it can also capsize the boat."
"But strength... is the foundation for controlling all of this!"
"Without the ability to protect one's principles, even immense wealth is nothing more than working for the benefit of others and inviting disaster."
"Only when financial resources and strength are commensurate can they complement each other and achieve great things."
These words, like the resounding toll of a bell, struck Xu Xiong's heart and soul.
He shuddered, and the confusion in his eyes vanished.
Instead, there was an unprecedented clarity and steadfastness.
The past pursuit of spiritual practice and the fear of breakthroughs have now perfectly merged with the true nature of spiritual practice.
"My senior brother's guidance was truly enlightening."
Xu Xiong bowed deeply, his tone resolute.
"I intend to immediately go into seclusion, neither Foundation Establishment nor leaving!"
"Once I have achieved success, I will use the Dao of Commerce as my weapon to help my senior brother pave the way forward!"
His voice was loud and clear, Xu Xiong said no more.
After bowing respectfully to Lu Li, he turned and sped off towards his secluded cultivation cave abode, his imposing figure never so resolute.
Lu Li hadn't expected that his words would solidify Xu Xiong's resolve.
While praying for them, I was also relieved.
With the Immortal Ascension Grand Assembly drawing ever closer, undercurrents are swirling among the various peaks of the sect. It would be a good thing for Xu Xiong to have more strength to protect himself.
but...
"Will my junior brother Xu really become Dao of Commerce tycoon someday?"