If Warren Buffett was a millennial today what would he be doing?
Buy avocados? La Croix? Or maybe bet the farm on cold brew.
I think it’s interesting how we see people for their genius as timeless rather than the environment that person was in when their genius was realized. In the investing world, I think that is overlooked all the time. Warren Buffett is the greatest long-term investor ever, but Buffett also had a unique moment in time to stake his flag. A young investor today, for example, has a much different landscape and opportunity than Warren Buffett did in the 1960s when he first got started. The next millennial Warren Buffett will not get rich doing the same things Buffett did.
One of Buffett’s biggest and earliest investments was GEICO. He bought 350 shares at a multiple of about 8 times earnings. There aren’t many companies with that kind of P/E ratio today. The market is bigger, more mature, and far more efficient than it was when Buffett could buy GEICO at that valuation. So what would Buffett be doing today? How should millennials be thinking about investing?
I think the number 1 thing here is don’t try to be like Buffett. That game is overplayed. I actually am starting to think investors are hurting themselves the more they read and follow Buffett. It’s an obsession with a moment in time that’s long passed. It will never give you an advantage and if anything it will hold you back. They’ve been teaching Buffett-isms in business schools for the last 40+ years and it’s the number one thing even the most novice investors talk about when they approach markets. Let’s try to invest like Buffett! Let’s pick stocks like the Oracle of Omaha! But when everyone is doing the same thing, well, we have an idea of how that story goes.
When Buffett started picking stocks in his first few years, his philosophy was fresh and new and something unique to him. Now some of you might be saying, “no you’re wrong because he was following his investment teacher Ben Graham. And Graham had been teaching for years before Buffett got started.” But while it’s true Graham is Buffett’s inspiration and teacher, he did not invest like Graham. He actually had his own design for picking stocks and in his book The Snowball, Buffett writes:
“Ben Graham would always tell me GEICO was too high. By his standards, it wasn’t the right kind of stock to buy. Still, by the end of 1951, I had three-quarters of my net worth or close to it invested in GEICO.”
When Buffett bought GEICO, it was something he wanted to do using his own investment philosophy. Part creativity, part education, and part circumstance. So maybe that’s the great lesson for young people today. If Warren Buffett was a millennial today he would be doing something entirely new and fresh. And he would probably be leveraging his age and surroundings. It might be cryptocurrencies, and yes I’ve now heard stories of young people making $100,000 on the crypto boom. Or maybe it’s avocados because avocado toast now rules everything around us. You get the idea — did you miss the rise of La Croix? Start searching for what’s next.
How differently can you think about markets today and what edge do you have as a young person in one of the most important age groups in the country? I welcome anyone to press the comment button below and share your thoughts or investment philosophy.