Date
18 August 2017
Warren Buffett (right) is shown in this 2006 file photo with Bill and Melinda Gates. Buffett has committed nearly all his wealth to the Bill and Melinda Gates Foundation. Photo: Bloomberg
Warren Buffett (right) is shown in this 2006 file photo with Bill and Melinda Gates. Buffett has committed nearly all his wealth to the Bill and Melinda Gates Foundation. Photo: Bloomberg

Why Buffett likes to hang around

If you had a billion US dollars for every year you’ve been alive, you’d be one of only three people in the world – Bill Gates, Slim Helu and Mark Zuckerberg.

Gates’s towering fortune, mostly nothing to do with Microsoft, tops out at US$83.9 billion, according to Bloomberg.

That works out to US$1.75 billion a year or US$6,888 for every minute he has been around.

Mexican Slim Helu, who is second to none except Gates, is value for money at 74, which makes those years worth a shade over US$1 billion each based on his holding of US$79.8 billion.

Slim is about even with Zuckerberg, who at 30 is already worth US$32 billion thanks to you and I (we’re all Facebookers, who isn’t?).

But Zuckerberg is going to outstrip everybody at the rate he’s going. When his wealth peaks, he would be worth more than Gates and Slim combined, according to financial analysts.

Still, few billionaires are more closely followed and obsessed about than the venerable Warren Buffett, whose facts and figures are the bible of investors.

He is considerably poorer than his bridge buddy Gates and investment rival Slim, but he has a deeper bench. As a wealth generator, Buffett has few equal.

So when his Berkshire Hathaway broke US$200,000 on Thursday, the event received the kind of celebratory toasts reserved for historic occasions such as coronations, national independence or the birth of your child.

That’s because Buffett is not your garden-variety billionaire. No inheritance, no tech savvy, no bank-breaking bets, no kissing up to despots and dictators.

His is an investment philosophy that’s as old as it’s tested, and it’s not something we don’t already know – pick the businesses you understand, go in low and stay.

So, if you and I have been investing our money along those lines, why aren’t we a Warren Buffett?

First of all, Buffett, unlike you and I, is a real stayer. You can’t be called that if you’re not 84 and still around – and making loads of money for your investors.

As much as he hews to tradition, he thinks out of the box.

When stock splits were very fashionable (they still are at last count), he stuck by his Berkshire A class shares.

The shares have doubled in about seven years and 10 months after hitting US$100,000. That’s about a year less than it took to double from US$50,000.

Both times, Berkshire beat the Standard & Poor’s 500 Index, according to Bloomberg.

Buffett likes to keep the stock expensive to discourage speculators and reward prudence and patience. Berkshire is easily accessible via its B shares, the offshoot of a 1996 carve-up of A shares. The stock trades at US$135.30.

After all this time, you’d wonder how Buffett keeps the fire in his belly. Then you realize his retirement plans don’t include retirement but a long-term view on how he’d like things to play out. And that is to the very end of the wealth he created.

After committing almost all his money to the Bill and Melinda Gates Foundation, Buffett famously said he wants his last check to bounce.

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RA/CG

EJ Insight contributor

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