Like many a coal mine today, the Warren Buffett mine has been exploited to its limits. From biographies, how-to books, blogs, and who knows what else, we have no shortage of insights into Warren Buffett’s investment and business success. In fact, get ready for another dose as Berkshire Hathaway is set to release its 2018 results this Saturday.
It’s not clear whether there is much more to learn, let alone learn something that can be applied to investing today. As Ben Carlson at A Wealth of Common Sense writes:
“I have worshipped at the altar of Buffett and Munger ever since I started in this industry. I still believe there is an immense amount we can learn from the giants of the investment world. I just think it’s a mistake to try to emulate their success in the exact same way.”
One of the biggest mistakes is to think that Warren Buffett got richer simply by being a better investor than anyone else out there. That would be an error. The Investor at Monevator wrote:
Instead, to get very rich as an investor, you need to invest like Warren Buffett on other people’s behalf, and claim a good portion of the gains for yourself.”
So it is interesting when you do come across the story of someone who got really rich, billionaire rich, in large part by investing their own money. In Forbes, Madeline Berg, profiles Herbert Wertheim who has amassed a fortune of some $2.3 billion. I don’t want to simply summarize the article, because Wertheim’s story is a fascinating one. However what we can do is pull some key lessons from his journey.
- Get started early. Wertheim bought his first stock, Lear Jet, when he was 18.
- Start your own business. Wertheim’s company, BPI, has revenues of $25 million and $10 million in net income a year.
- Invest in your own education. Wertheim spends time reading technical journals.
- “My goal is to buy and almost never sell.” – Wertheim holds shares in Microsoft and Apple since their respective IPOs.
- Limit your use of leverage.
- Strive for tax efficiency.
- Hit it big. A $5 million dollar investment in Heico, which was then a penny stock, has turned into $800 million over 28 years.
- Enjoy life. By all accounts Wertheim is enjoying his wealth and freedom.
- Be charitable. Wertheim has signed the Giving Pledge.
Wertheim’s story is above all else a real live example of the power of compounding at work. Were his investments and wealth not verified, his story would be easy to doubt. One big lesson we left out. It helps to live, work and invest in the United States during a time when the stock market was, by and large, in a bull market. It helps to do some nifty stock picking, but it also helps to have the wind at your back.
Trying to emulate the scale of Wertheim’s success is impossible for nearly everybody. In part, because there was likely some luck involved along the way. But there are some lessons we can all take from his life story. If nothing else, it gives us another investor to look up to.