Not long ago I read Roger Lowenstein’s “Buffett: The Making of an American Capitalist". Besides being a fascinating read, the book was packed with life, business and investing lessons, three of which I would like to share.
Firstly, Warren Buffett had a plan. It was not an original plan. It was obtained from Benjamin Graham's book, “The Intelligent Investor”. But an excellent plan it was, all the same. Buffett was so intrigued, he sat under Graham's tutelage, and learned everything he could from the master. A plan doesn’t need to be original – in fact, often it’s probably better to execute well on a tried and tested plan rather than hope that an original plan has what it takes.
Secondly, Warren Buffett was diligent. Yes, he is brilliant – with a natural aptitude for entrepreneurship, saving, mathematics and business, among other talents. But he applied himself with great vigour to the field of value investing. He was not looking for an easy ride – he wanted to be the best he could be in his field. And the best he became. Never would he invest without thoroughly investigating the company – until he knew it’s workings inside out – sometimes better even than the company’s senior executives. This allowed him to avoid widespread losses over his portfolio in any given year – and keep his gains – a major principle for success in any endeavor.
Thirdly, Warren Buffet modified his approach – his plan – to accommodate the context of the day. He did not switch off his brain and blindly follow Graham’s plan. He read voraciously, and incorporated new concepts into his investment plan. He watched industry shifts – kept his perspective – and this allowed him to make the appropriate divestments and investments at the right time. Did he always win? No. But his consistent overall portfolio gains, year over year over year, are a massive testament to just how little luck was actually involved in his investing success.
So, if you want wild crazy success, just like Warren Buffett…that’s all you have to do! Get a good, well-tested plan. Get really diligent about learning everything you can in your chosen field, and apply yourself like your life depends on it. Then keep your eyes wide open, and be ready to make your moves with clarity and decisiveness, keeping the big picture in mind. There are no shortcuts when you’re playing the game this way. But then again, success is a journey, not an event. Plus, the long term potential for gains when you play this way are clearly not small.
So enjoy the ride.