Can we replicate Warren Buffett’s success?
$1000 invested in Buffett’s Berkshire Hathaway in 1964 when Buffett took over the company would be ca. $108 million today. If the same investor would invested in SP500 he would have ca. $400.000 today. Warren Buffet has very high return but can we replicate his success or do we waste our time and resources by trying to learn from him?
His annual compound return is more than 24%. This is hardly achievable for an average individual investor. But one should ask why is it hard to achieve?
(1) The average investor is not highly motivated like him and would not work hard as he does or make sacrifices like him:
“I get in around 7 or 8 and I read until about 7 or 8 at night. And I go home and see my family and then I’ll read for another hour or two in bed at night. And you know, there might only be three to four phone calls the entire week. So there are very, very few interruptions … But it’s literally just reading about 12 hours a day.” Warren Buffett
“He operated out of a tiny study at home that could be entered only by passing through the bedroom. He worked odd hours, a night owl like Susie, reading annual reports in his pajamas, drinking Pepsi-Cola and eating Kitty Clover potato chips, enjoying the freedom and solitude. He pored over the Moody’s Manuals looking for ideas, absorbing statistics on company after company. During the day, he went to the library and read newspapers and industry trade magazines. As with his boyhood paper route, he took care to handle everything of value personally, a pleasure in and of itself. He typed his own letters on an IBM typewriter, carefully lining up his letterhead sheet on the carriage. To make copies he slid sheets of blue carbon paper and tissue-thin onionskin behind the first page. He did all his own filing. He did the bookkeeping himself and prepared his own tax returns. With its numbers, accuracy, and the measuring of results, the recordkeeping aspect of the job pleased him.” Schroeder, Alice (2008-09-29). The Snowball: Warren Buffett and the Business of Life
(2) One can say he is a genius or has a high IQ. That he has a high IQ is true but his investing method which is tested by many investors is simple, doesn’t requires high IQ. And to my opinion, IQ can be increased if the person uses his intelligence more often.
(3) The majority of investors who claim to imitate Warren Buffett are not actually following him. How many of them read the shareholder letters of Berkshire Hathaway?
(4) The main goal of learning from W. Buffett is improving the own performance even if 24% “cannot” be achieved and enjoying the investment world more
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