Warren Buffett, the greatest investor of our time – arguably the best of all time – has announced he’ll retire within the next 12 months. At the age of 94, it isn’t a surprising decision, but it certainly is the end of an era.
This isn’t just the retirement of a CEO. Buffett’s retirement marks the closing chapter of a masterclass in long-term investing, discipline and patience.
Let’s put his genius in perspective: if you had invested $1,000 in the holding company Berkshire Hathaway in 1965, when Buffett took control, it would be worth $45 million today. When considering a more recent investment – let’s say $100,000 in the year 2000 – well, it would have grown to be worth more than $8 million.
Now, it’s worth noting that Berkshire Hathaway has achieved a 19.9 per cent per annum compounding rate of return for a total period of 60 years!
To put this number in perspective, the value of the 500 biggest companies in America grew by 10.4 per cent per annum, compounding over the same period and that assumes 100 per cent of dividends were reinvested in that period.
The best book on Warren Buffett is Snowball by Alice Schroeder and I urge you to read it. Somewhat ironically, the great man bought Berkshire Hathaway when it was a textiles business, in decline. He achieved what he achieved by reinvesting the cash from the textile business into insurance, then used the “float” – money held before claims are paid – to invest in more companies.
I know I’m not telling you something you don’t already know when I say we live in a world obsessed with quick wins and market timing. Buffett, though, reminds us that real wealth isn’t something you build overnight. It’s built slowly, through consistent action over time.
The best part is that you don’t have to be a stock picker to follow Buffett’s example. Full disclosure: I don’t invest in shares myself, but I do follow one of his core rules: “Only invest in what you truly understand.”
But what makes Buffett truly special isn’t just his track record, it’s his willingness to educate. Unlike many other financial gurus, Buffett distils complex ideas into timeless wisdom, peppered with humility and wit.
Case in point, these gems:
- On staying rational: “Be greedy when others are fearful and fearful when others are greedy.”
- On his success: “I owe my fortune to being born in America and compound growth.”
- On hidden risk: “Only when the tide goes out do you discover who’s been swimming naked.”
- On patience: “The first rule of compound growth: never interrupt it. The second rule of compound growth: never forget rule number 1.”
- On market timing: “At midnight, everything is going to turn to pumpkins and mice… The trouble is, there are no clocks on the wall.”
Each quote is more than simply clever. It’s a principle – earned over decades and shared freely.
Warren Buffett’s retirement is not just an end. It’s a reminder of how powerful simple, timeless principles can be.
Don’t let this moment pass without asking: What can I learn and apply from a man who turned $1,000 into $45 million?
The best time to start was yesterday. The second-best time is now.
If investing is something you’re interested in and not sure where to start, register for a Custodian webinar or get your hands on a copy of my book Bulletproof Investing.
