There is a tradition of looking into the secrets of successful people such as Warren Buffet. In his case, there is whole litany of explanations and ‘revelations’ in books coming from ‘experts’ and analysts. It is a reasonable question to ask considering that 100 US dollars invested in the S&P 500 in 1965 is now worth now around 1000 US dollars. Not bad. But the same amount in the hands of Warren Buffet’s Berkshire would be worth close to 700, 000 US dollars. So, the man must have secrets!
Some ‘experts’ give what we call here at The Chalfont Project [1] a ‘Process and Systems Answer’ of the type: solid investments not moving around all the time, going for the long term etc. Excuse my poor financial articulation!
What has not happened that often is going direct to source and asking the man himself, or perhaps his right hand man, Charlie Munger, who, in his own right, is an extremely successful investor and a great character.
Here is a bit of insight from the words of Mr. Munger: ‘Warren is one of the best learning machines on this earth. The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you. Warren was lucky that he could still learn effectively and build his skills, even after he reached retirement age. Warren’s investing skills have markedly increased since he turned 65’.
Then, getting a bit more concrete, it turns out that this is Warren Buffet’s One Secret (and Charlie Munger’s for that matter). They sit and read and think, then, they sit and read and think, and they end the day sitting, reading and thinking’ (The Motley Fool, 7, September 2014). This ia whet we call ‘the Behavioural Answer’.
They insist, this is not just an expression. They do read a lot, I mean, a lot.
What must give them a great competitive advantage because these days, nobody seems to ‘read’ much. OK, this is an exaggeration. You are reading this! But we are loosing the ability to read and reflect. We have a great excuse: too much information! Well, then, let’s call it ability to filter and distinguish between signal and noise.
Buffet and Munger’s One secret is refreshing.
I read lots, so I have half of the story. The other half needs a bit more time: improving my investing skills after 65.