A Couple of Warren Buffett Tidbits

Warren Buffett is of course a subject of (perhaps unhealthy) interest from many people. Two interesting tidbits I have encountered in reading.

Things that mattered: he started early, and let compounding compound.  From a blog post by  Morgan Housel http://www.collaborativefund.com/blog/the-freakishly-strong-base/

“What if Buffett got serious about investing when he was age 22 – just out of college – instead of age 10? Imagine he spends his 20s learning about investments, and his net worth at age 30 was in the still-impressive 90th percentile. Using today’s net worth percentiles and adjusting them for 1960s-era inflation, that would mean he’d be worth about $24,000 at age 30.

Now we can do some fun calculations.

If, at age 30, Buffett was worth $24,000 instead of the $1 million he actually accumulated, and went on to earn the same returns, how much would he be worth today?

$1.9 billion.”  [Instead of 81 billion]

Later in the same piece,

“But there are times when you have to relentlessly leave something that looks small alone so it has a chance of compounding into something big. Charlie Munger explained: “The first rule of compounding: Never interrupt it unnecessarily.”

The whole thing is worth reading. On the starting early, I blogged about this before.

The other point comes from the FT writer John Kay (great stylist and incisive about the woes and wonders of finance).  He points out that had Buffett invested through a managed fund (instead of investing for himself), the typical 2 and 20 fees would mean that Buffett’s personal fortune would today be 5 billion, with the fund that managed his money getting the rest.  (Kay was doing this calculation a few years back when Buffett was at a mere 50 millions: fees would take 90% of his money!).

So take aways: start early, let compounding compound, and minimize fees!


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