Everyone tries to outguess the Oracle of Omaha. He started with $105,000 (about $600,000 in today's market) buying, selling, trading and doing his thing. He discovered a textile company in the Northeast by the name of Berkshire Hathaway earning strong profits and selling at a great price. He decide to invest most of his capital into Berkshire. Berkshire Hathaway then had a fire sale on its stock. Mr. Buffett raised the capital to purchase the entire company outright. The little textile company sent a fat check to Omaha every quarter. No need for company upkeep, payment of debts or replacing fading technology. Every dollar earned was gravy to Mr. Buffett. He then took those quarterly dollars and went on a search for other "wonderful companies selling at a fantastic price" He found them. He bought outright or big chunks of other profitable companies that in turn sent fat quarterly checks to Omaha. One company became two. Two became four and four became eight. Profitable companies sending fat quarterly checks which in turn is used to buy other profitable companies which will send fat quarterly checks... He purchase 1 cash machine. Which in turn purchased 2 cash machines, then 4 and 8... Simplified. But the essential, basic truth.
will I ever catch him....? not... what makes these guys...Bill Gates... Warren Buffet... George Bush....different? Luck?..i do not think so... are they greedier? more power hungry? Smarter? Perfectionists? do they have visions? Michael B. He purchase 1 cash machine. Which in turn purchased 2 cash machines, then 4 and 8... Simplified. But the essential, basic truth.
Yes, he was pyramiding in cash cows and what was the really big accelerator was him entering the insurance business. This has meant steady streams of cash every month which could be invested.
His secret is randomness. There is a statistical probability that if you have unlimited time and millions of monkeys clicking on type writers, one of them sooner or later will end up with a complete novel. Same thing with Buffet. Out of an army of investors, there will always be few that will greatly outperform the rest due to random distribution. Imagine for a second that his fist deal was a disaster. Who knows where he would be now.
Interesting theory RedDuke. Karma favors one over another. Would you say the same about Cassanova or Babe Ruth?
You forgot the most important method of making money - being the insurance underwritter. Casinos and Insurance have the best returns on LIQUID capital.
I think I could live with this kind of return.. "IF" you invested $1000 the first year and compounded the returns each year you would have $4,543,400 now.
It depends, in certain endeavors natural gift is a must. I can work extremely hard and practice all I want, but there is no way I can become an opera singer. Such gift distributed randomly. But than hard work comes into the picture in order to become great.
But you need to be lucky enough to start with someone like Buffet, and the odds of finding a fund manager/investor like this are against you. Then you need to continue to believe in him for several decades.