At age 93, Warren Buffett is the powerhouse behind Berkshire Hathaway Inc. and is widely respected for his exceptional investment success and generous philanthropy.
His transparency in sharing investment philosophies at the annual Berkshire Hathaway meetings, alongside his longtime business partner Charlie Munger, has cultivated a global following. Yet, despite the duo's willingness to share their insights, emulating their success remains an elusive goal for many.
In the 1999 Berkshire Hathaway annual meeting, a curious person asked, "Mr. Buffett, how do I make $30 billion?" The response from the then-68-year-old Buffett was as simple as it was profound. "Start early."
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He likened building wealth through compound interest to rolling a snowball down a hill. "I started building this little snowball at the top of a very long hill. The trick to have a very long hill is either starting very young or living to be very old," he said.
Buffett, whose fortune has since ballooned to over $120 billion, underscored the camaraderie between an investor and compound interest. He reminisced about his early days, suggesting that if he were graduating from college in 1999 with $10,000 to invest, his gaze would be fixed on smaller companies.
"I probably would focus on smaller companies because I would be working with smaller sums, and there's more chance that something is overlooked in that arena," he said, advocating a meticulous approach of examining companies alphabetically.
His love for well-established brands like Coca-Cola and Apple is well-known. However, the principles he shared about starting young could extend to the realm of investing in young companies, too. The allure of startups lies in their potential for rapid growth and innovation. For instance, Mode Mobile, a new phone company, presents an innovative model allowing people to monetize their smartphone usage. Healthcare startups such as iRemedy are challenging the conventions of traditional healthcare, striving to expedite the provision of lifesaving supplies for patients at more affordable rates to doctors, hospitals and healthcare providers. Investing in such young ventures could echo Buffett's notion of starting young, albeit from a different vantage point.
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Buffett's counsel extends to the virtue of self-reliance in the investing odyssey. Investors, he stressed, should nurture their own knowledge and intuition, acting "very vigorously" when a promising venture surfaces. The quest for consensus, he warned, could be a futile endeavor in the investment landscape.
"You can't look around for people to agree with you," Buffett said of making investment decisions. "You can't look around for people to even know what you're talking about."
The billionaire investor also mentioned the importance of being cautious about college debt and finding one's passion. According to Buffett, finding a field one is passionate about is integral as it significantly reduces competition and propels people toward success. He shared stories of people who found success without formal education, emphasizing the fact that the conventional path of acquiring a college degree isn't the only route to success.
Buffett voiced that beyond a certain threshold, wealth loses its luster. "The money makes very little difference after a moderate level," he said, adding that he would readily trade a significant chunk of his wealth for more years of life or the liberty to live those years on his own terms.
The Oracle of Omaha's simplistic advice unveils the art and science of successful investing. It accentuates an early start, the magic of compound interest and the importance of self-reliance and continuous learning in the quest for investment success. His reflections also evoke a broader contemplation on the essence of wealth and the pursuit of a fulfilling life.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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