Warren Buffett: Does He Just Stay Still or Have Skills?
No One Does Not Know About Warren Buffett!
Talking about investment will bring up the topic of Warren Buffett. His net worth now goes beyond $116 billion — the latest updates in May 2022. According to the Bloomberg Billionaires Index, he is the sixth richest person in the world!
“How did Warren Buffett become rich?” is among the most asked questions about such a prominent figure. According to Wikipedia, the investments in multiple businesses first made him a millionaire in 1962. The value of his partnerships was over $1,025,000 at the time. Subsequently, he decided to invest in and then took over Berkshire Hathaway.
If you expect to hear of miracles in real life that involve overnight success, I am afraid to say that Warren is not a salient example. It was an early success when Buffett became a millionaire at the age of 32. Yet, he started his investing career long before that — when he was 11 years old. And it took him around 28 years to derive tremendous success for Berkshire Hathaway. In 1990, Buffett was officially in the group of billionaires in the world.
The note is that Warren is a 91-year-old man, but he still manages Berkshire Hathaway as a chairman and CEO. The thing that makes me admire and have curiosity about is how he accomplished such consistent and growing success.
Some Say That Buffett’s Wealth Is an Outcome of Sheer Fluke, But Is It?
Sometimes success came along in the most obscure way, especially unprecedented ones. People call it dumb luck due to the lack of explanation and also the jealousy. Yet, I believe only explainable success could last.
Straightforwardly, everyone loves to earn higher but only a few of them could achieve that goal. It is a harsh fact, but it implies that wealthy figures have planned out their careers by strategies and knowledge.
They do not wake up one day and find themselves surrounded by millions of dollars. They have strong desires to attain something in their lives and work to accomplish their dreams!
Warren Buffett might not be an excellent example of quick fame. However, he is a living legend of sustainable wealth. In a speech at Goldman Sachs for Small Business, he revealed underlying principles behind remarkable accomplishments through inspiring true stories about Mrs. Rose Blumkin and Jack Taylor.
It evokes many thoughts about the basics and simplicity that highly successful people follow. The key messages of Buffett’s speech are to have the desire to rise above the standard and to delight customers.
You might say “He can talk whatever he wants, such ambivalent philosophies, as he is now on the top of the world!”. Fair to say that your doubt is reasonable as I had the same suspicion. Yet, he is not a big talker, which I found after reading many articles and videos about him. Moreover, I learned that every base of a profitable business is easy through my first-hand experience — making a friend out of each customer.
Customers can’t revisit your stores or purchase more things while you treat them with a lack of respect and appreciation. Buffet said that we might forget what the price of a tie was but would not forget how he was treated.
So, What About Investing? What Are His Secrets?
Warren Buffett’s holding strategy to Coke stocks for more than 40 years brought him tremendous income. Yet, there are still contradictions within his perspectives about options and other financial derivatives.
Specifically, he showed cautious attitudes about these instruments when calling them by time bombs and weapons of mass destruction. However, Warren traded derivatives in 2008 as the support of government bailout promotion. Also, Berkshire Hathaway still keeps huge derivatives.
Such a conflict of opinions seems not to be the lack of consistency but the outcome of a strategy to misdirect others. Michael Steinhardt, a seasoned fund manager, commented on Warren’s tactics as the greatest PR campaign ever!
So, seemingly spontaneous decisions by Warren Buffett about investments in options or derivatives are the flexible tactics to lead his trades to success. Of course, there are still controversies about whether his luck just lasted longer than common standards.
There is still a mystery about what is inside such a genius mind of investing. Yet, I find his approach is to go against conceptions. His famous saying is that investors should be bold when everyone else is cautious and in reverse directions.
Specifically, despite the bond-trading scandal, Buffett took Salomon Brothers in 1991. Or he decided to inject capital into Bank of America amidst the 2007–2009 financial crisis. These examples are two of many cases proving Buffett’s risk-taking attitude toward financial investments.
Yet, it must be an odd lack if I did not mention his sensitivity to financial price movements and technical analysis. If so, it would sound so much like an instinctive trade.
The thing that I want to highlight here is that Warren Buffett maintained his calmness and clarity amidst the chaotic markets. Additionally, he is fully aware of the power of repurchase grinds, which he shared in the shareholder letter in 2020.
Others deep dive into his strategies and find out that the best moves can simply be to spot what one already owns. Investors should take a closer look at what is truly profitable rather than chasing the loudest, shiniest equity knickknacks.
The destination that every options trader aims at is time arbitrage. It involves short-term options for the purchase of blue-chip equities that you can hold for years. Meanwhile, the premium of options will supplement the increasing number of dividends and stock returns over time.
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