Everyone dreams of having Warren Buffett’s portfolio, but few do.
Why?
Patience.
Here’s what Buffett’s patience can teach us about investing
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1/ This is young Warren Buffett.
When he was 11, he bought three shares of Cities Service Preferred.
The stock fluctuated, and he eventually sold them for $5.
If he had waited a little while longer, he would have earned $500.
2/ So, what did young Buffett learn? Investing is unpredictable.
As Ralph Wanger put it, investing is like walking a dog. You don’t know when the dog will sniff a tree or chase a squirrel.
Predicting those sudden movements is futile.
3/ This experience helped shaped Buffett’s investing strategy.
That means investing in companies with
1) solid fundamentals
2) strong earnings power
3) potential for growth
4/ Here’s an example.
In 1951, at age 21, Buffett visits a little-known insurance company on Saturday.
He talks with the only employee there and likes what he hears:
Sell direct to consumers
Bypass traditional agents
Target high-quality drivers
No commissions
5/ Buffett was excited about this unique approach to insurance.
He immediately invested half his net worth.
In one year, his investment grew 50%.
6/ Buffett could have taken his money out there.
But he didn’t.
He believed in the company and patiently held onto his shares.
The result: a 100x growth over the next two decades.
7/ That company was GEICO.
Today, it’s worth more than $44 billion.
Buffett himself made a $41.6 billion profit on GEICO.
8/ What most people don’t realize is that Warren Buffett isn’t an overnight success story.
He became a billionaire in his 50s because of the investments he made in his 20s and 30s.
9/ Warren Buffett’s Net Worth:
Age 30: $1 million
Age 37: $10 million
Age 47: $67 million
Age 53: $620 million
Age 66: $17 billion
Age 83: $58.5 billion
10/ These numbers don’t even do Warren Buffet justice.
According to the NYT, Buffet has donated $37 billion worth of Berkshire Hathaway stock.
11/ If you have one takeaway, it should be patience, patience, and more patience.
Or, as Buffett says:
“The stock market is a device for transferring money from the impatient to the patient.”
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