Thursday 10 December 2015

How smart is Warren Buffett?

"We've seen oil magnates, real estate moguls, shippers and robber barons at the top of the money heap, but Buffett is the first person to get there by picking stocks" [Rothchild, 1995]


1982            Buffett first appeared on the first Forbes list

1992            Reached top position in 1993 with a fortune of $8.2 billion.

2001-2007  Buffett was in second place (after Bill Gates).

2008            Buffett was again in first place with a fortune of $62 billion.

2010-2012   Buffett remained in third place (by that time he ha transferred some of his fortune to a charitable fund)

2013             He was in fourth place.



"Stocks are simple.  All you do is buy shares in a great business for less than the business is intrinsically worth, with management of the highest integrity and ability.  Then you own those shares forever". [Buffett]

The data on Buffett's results are reliable and his performance is very well documented.

"Is this a result of Buffett's application of his methodology, or did it happen by chance?"
"Is it possible to replicate this achievement?"
"What is required for replication?"

The question of whether financial success is achieved by chance or through application of a methodology is the central point of discussion on the rationality and efficiency of financial markets.

Buffett would not have achieved his results without the "right" investment process and without his unique abilities as a business analyst.  But icebergs always have much larger submerged parts.  The true "secrets" may hide there.  Supporting the investment process that he developed is the intellectual foundation (intellectual core) beneath his accomplishment.  

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