This weekend Warren Buffett will be hosting his AGM for Berkshire Hathaway. A great deal of cyber ink has been spilled over Mr. Buffett so I will not try to repeat anything old. While I am also an admirer of Mr. Buffett I do try to look at him critically. There is a couple of points that almost nobody seems to ever bring up. Mr. Buffett aquired his great wealth certainly due to his excellent investing skills. But are his investment skills that much better than everybody else? I don't think so. In my opinion there are 2 key reasons to his vast wealth.
- He started managing money at a very young age. According to the records he started his partnerships at the age of 27. To me this is very young indeed. I certainly would not give any money to such a person at such an age. They would have to provide some evidence of an investment record. I suspect most people establish investment experience over say 15-20 years and then start managing money. Mr. Buffett's early start allowed him a huge lead in what is essentially a compounding game.
- This point is really tied in with no 1. Although Mr. Buffett did not come from a wealthy family I suspect he was very well connected. Mr. Buffett's father was a Member of Congress. This allowed him to start his partnerships from wealthy families in the american mid-west. In the 1960's when the market was doing quite well he received substantial amount from fees to his partnerships.
BTW I have never bought Berkshire and have no immediate plans to buy stock. I generally find insurance companies too complicated. Maybe one day I will change my mind.
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