Warren Buffett SHOCKS: Makes Huge FINTECH Investment!
With recent news of Berkshire Hathaway’s (Warren Buffett’s holding company) investments into the fintech sector, by taking positions with an Indian payment app and a Brazilian payment processor, I want to take a step back from this new direction that Todd Combs, Berkshire’s younger money manager, is taking and return to the core of Warren Buffett’s success in business.
Look at the progression in net worth, and you’ll notice a dramatic pattern, as he goes through these phases, between the ages of 21 and 26, for example, when his net worth goes up by 700%, or from age 32 to 39, when it multiplies by 25.
Warren Buffett was born in 1930, so at age 32, it was 1962. He managed to grow his wealth by 2,500%, during this 7-year period (1962-1969), while the S&P 500 returned 58%.
How is it possible to grow your wealth 50 times faster than the general U.S. economy?
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These returns are beyond remarkable and turned Warren’s neighbors, friends, and early investors into multi-millionaires (those, who were smart enough to hold on and originally invest).
During the time of his rise to stardom, Buffett raised money to buy mostly private businesses, which is a key lesson.
Many private companies are run by families, who are gifted at servicing their customers, but don’t have the faintest idea what their operation is worth.
Warren spotted this discrepancy between people, who possess well-developed merchant skills, the strength of service-oriented companies, run by committed, consumer-friendly people, but a lack of knowledge, exhibited by those very same people, regarding the market value of the business they had built.
So, in pursuing humongous returns, don’t limit yourself to the public markets alone. All around you, in your vicinity, are fantastic companies, which you could bid on amounts that are well below what they are really worth, since they have no idea what their reputation is worth or how powerful their repeat business is.
Secondly, Buffett was able to purchase 5% of American Express, when it got into trouble with the “Salad Oil” scandal, which you probably haven’t heard about, but back then, it was a huge problem.
This is the hallmark of Buffett’s strategy: buying phenomenal brands, when the public makes the mistake of over-blowing fears, regarding temporary issues that all companies face at some point.
This is simple enough to do. Create a Watch List of the world’s 50 best-performing blue-chip stocks and track any noticable sell-offs, inquire as to the reason of them, and if you are under the impression that the sell-off is irrational, take the other side of the bet.
I remember buying Intel (INTC) right after the 2008 crash at $15 a share. Today, the price is triple that, and the company now pays a much more generous dividend. It will probably end up becoming one of the most profitable investments I’ve ever made.
I share this with you because the headlines at the time were that Intel’s days of dominating the chip industry are behind it, due to the “Death of PC.”
Don’t allow the “noise,” coming from the media and the mass population, to cloud accurate thinking.
Lastly, Buffett was able to become a billionaire because he DOESN’T sell!
In 1976, Buffett understood the magic of owning insurance businesses and began purchasing shares of GEICO, which he wholly-owns since 1996.
No one can get him to sell what he classes “the crown jewel,” since Buffett appreciates the rarity of world-class businesses.
So, the third lesson is to KEEP buying shares of the superb businesses you own over time. This has to be your most pressing objective, to purchase as many shares as possible for the best possible price.
If all of the above takes too much effort, then the S&P 500 index is your best option, since it will continue to return 7.6%, predictably, for the rest of your life.
Remember, Buffett has been laser-focused. He is 88 and still runs Berkshire.
Learn from this that focusing on your career, by immersing yourself in succeeding, is the surest way to advance.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.