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  • Psychology of Money - p0071

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    The document discusses Warren Buffett's success as an investor and attributes it primarily to his ability to survive unpredictable ups and downs over many decades of investing consistently. It notes that Buffett did not take excessive risks like relying too heavily on debt, panic selling during recessions, damaging his reputation, or relying only on one investment strategy. He was also able to avoid burning out and continued investing from age 10 until at least age 89. This longevity allowed compounding to work wonders and generate his extraordinary returns. The document then provides an anecdote about Rick Guerin, who briefly invested alongside Buffett and Munger but disappeared from their level of success, allegedly because unlike Buffett and Munger, Guerin was in

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    The document discusses Warren Buffett's success as an investor and attributes it primarily to his ability to survive unpredictable ups and downs over many decades of investing consistently. It notes that Buffett did not take excessive risks like relying too heavily on debt, panic selling during recessions, damaging his reputation, or relying only on one investment strategy. He was also able to avoid burning out and continued investing from age 10 until at least age 89. This longevity allowed compounding to work wonders and generate his extraordinary returns. The document then provides an anecdote about Rick Guerin, who briefly invested alongside Buffett and Munger but disappeared from their level of success, allegedly because unlike Buffett and Munger, Guerin was in

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    © All Rights Reserved
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    5 views1 page

    Psychology of Money - p0071

    Uploaded by

    vikasthakkar2020
    The document discusses Warren Buffett's success as an investor and attributes it primarily to his ability to survive unpredictable ups and downs over many decades of investing consistently. It notes that Buffett did not take excessive risks like relying too heavily on debt, panic selling during recessions, damaging his reputation, or relying only on one investment strategy. He was also able to avoid burning out and continued investing from age 10 until at least age 89. This longevity allowed compounding to work wonders and generate his extraordinary returns. The document then provides an anecdote about Rick Guerin, who briefly invested alongside Buffett and Munger but disappeared from their level of success, allegedly because unlike Buffett and Munger, Guerin was in

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    absolutely extraordinary.

    But getting and keeping that extraordinary growth requires surviving all the
    unpredictable ups and downs that everyone inevitably experiences over time.

    We can spend years trying to figure out how Buffett achieved his investment
    returns: how he found the best companies, the cheapest stocks, the best
    managers. That’s hard. Less hard but equally important is pointing out what he
    didn’t do.

    He didn’t get carried away with debt.

    He didn’t panic and sell during the 14 recessions he’s lived through.

    He didn’t sully his business reputation.

    He didn’t attach himself to one strategy, one world view, or one passing trend.

    He didn’t rely on others’ money (managing investments through a public


    company meant investors couldn’t withdraw their capital).

    He didn’t burn himself out and quit or retire.

    He survived. Survival gave him longevity. And longevity—investing


    consistently from age 10 to at least age 89—is what made compounding work
    wonders. That single point is what matters most when describing his success.

    To show you what I mean, you have to hear the story of Rick Guerin.

    You’ve likely heard of the investing duo of Warren Buffett and Charlie Munger.
    But 40 years ago there was a third member of the group, Rick Guerin.

    Warren, Charlie, and Rick made investments together and interviewed business
    managers together. Then Rick kind of disappeared, at least relative to Buffett
    and Munger’s success. Investor Mohnish Pabrai once asked Buffett what
    happened to Rick. Mohnish recalled:

    [Warren said] “Charlie and I always knew that we would become incredibly
    wealthy. We were not in a hurry to get wealthy; we knew it would happen. Rick
    was just as smart as us, but he was in a hurry.”

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