فصل 6 بخش 4

CHAPTER 6.4

WARREN BUFFETT: THE ORACLE OF OMAHA

The Legend Who’s Said It All; CEO, Berkshire Hathaway

I was in the greenroom of the Today show, waiting to go on the air, when in walked the man himself: Warren Buffett, one of the greatest investors of the 20th century and, with $67.6 billion to his name, the third wealthiest man in the world. We were scheduled to appear (together with Spanx founder Sara Blakely and future secretary of Housing and Urban Development Julian Castro) in a roundtable discussion with Matt Lauer about economic success and our views on the direction of the US economy. I’ve always been a huge fan of Buffett’s. Like millions of investors around the world, I’ve been inspired by the story of how a humble stockbroker from Nebraska turned a failing New England textile business called Berkshire Hathaway into the fifth largest publicly held company in the world, with assets of nearly a half trillion dollars and holdings in everything from Geico insurance to See’s Candies. His not-so-secret to success has been “value investing”: a system he learned and perfected from his mentor Ben Graham. It revolves around looking for undervalued companies and buying stock with the expectation it will rise in price over the long term. It’s one of the simplest forms of asymmetric risk/reward, and one that requires a tremendous amount of research, skill, and cash—which is one of the reasons Buffett pursued insurance holdings that throw off great cash flow and thus investment opportunities.

Not only has Buffett been phenomenally successful in business, but also he’s become one of the most generous philanthropists in history, pledging 99% of his vast personal fortune to charity through the Bill and Melinda Gates Foundation. He’s also probably the most quotable—and quoted—business leader ever, and you’ve already read some priceless nuggets of his wisdom sprinkled throughout these pages.

When I finally had him in the same room with me, I couldn’t resist the opportunity to tell him about this book project. Perhaps we could sit down for an interview about how the individual investor can win in this volatile economy?

He looked up at me with a twinkle in his eye. “Tony,” he said, “I’d love to help you, but I’m afraid I’ve already said everything a person can say on the subject.” It was hard to argue with that. Since 1970, he’s been putting out an eagerly awaited annual letter to his shareholders filled with plain-spoken investing advice and commentary. Plus, there have already been nearly 50 books published with his name on the jacket—even a few of them written by Buffett himself!

Still, I pressed ahead.

“But now that you’ve announced you’re leaving almost all of your wealth to charity, what kind of portfolio would you recommend for your family to protect and grow their own investments?” He smiled again and grabbed my arm. “It so simple,” he said. Indexing is the way to go. Invest in great American businesses without paying all the fees of a mutual fund manager and hang on to those companies, and you will win over the long term!” Wow! The most famous stock picker in the world has embraced index funds as the best and most cost-effective investment vehicles.

Later, even after Steve Forbes and Ray Dalio reached out on my behalf to encourage Warren to have a more detailed interview with me, he let me know there was no need. Warren told me that everything he had to say about investing that’s important is already published. All he would tell an individual investor today is to invest in index funds that give you exposure to the broad market of the best companies in the world and hold on to them for the long term. I guess repetition is the mother of skill. I got it, Warren! In this year’s letter to the shareholders, Warren emphasized the same advice to all investors once again! What’s his asset allocation? Below are the instructions he has left for his wife and their trust after he has passed: “Put 10% . . . in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, or individuals—who employ high-fee managers.” Jack Bogle is very happy about this advice! America’s most respected investor is endorsing the strategy Jack has promoted for almost 40 years!

Remember, Buffett made a $1 million wager against New York–based Protégé Partners betting that Protégé could not pick five top hedge fund managers who will collectively beat the S&P 500 index over a ten-year period? Again, as of February 2014, the S&P 500 was up 43.8%, while the five hedge funds were up 12.5%.

The Oracle of Omaha has spoken!