The richest man in America is old. His name is Warren Buffett and he is the Tiger Woods (when Tiger was great) of investing. Here are his investment returns under Berkshire Hathaway which he runs and of which he owns 20% and has run since 1965 and is worth give or take $50 billion. One share of Berkshire Hathaway stock held from 1964 to 2009 would have had a 434,057% overall gain, compared to 5,430% from the Standard & Poor’s 500. That means $1,000 invested would be worth over $4M. Wow!
For those of you who may some day want to be professional investors, this is financial porn.
A kid at Harvard Business School (where Buffett was rejected when he applied – he went to Columbia instead) asked him how he too could be a billionaire. (Buffett in 2010 was worth about x billion.) Buffett said something like, “Start with $10,000 in savings, compound at 10% a year – and live to be 497 years old.” Time and compounding are your friends when you want to create wealth by investing. Your money works for you. You don’t do stupid things with it and over time, compounding works in your favor.
Rich people stick together
Interestingly Warren Buffett’s best buddy is the 2nd wealthiest American – Bill Gates, founder of Microsoft. In 2010 Gates was estimated by Forbes to be worth about $53 billion. The Microsoft story is renowned in technology circles: Gates as a teen went to then-titan behemoth IBM and asked to write the software for their computers.
IBM famously believed that all of the value in computers was in the hardware so they ceded the operating system (the brains of the computer) to Microsoft who quickly became a de facto monopoly, killing or eating any competitors in its path. They sell a product suite for about $200 to nearly every computer in the world. That product costs them about $10. Nice margins.