Warren Buffett is one of the most respected investors in the world. But, in addition to his extensive experience, Buffett will surely also attract attention because in a context like the current one where the most powerful businessmen usually come from the technological world, they developed a company based on specific skills, he has dedicated himself to investing in companies fundamentally, .
But what does he attribute his own success to? Buffett has said on several occasions that there is nothing he believes in more than the power of learning, and the more you know about a project or investment, the more likely it is to do well with it.
Buffett attributes his investing start to a 1936 book called One Thousand Ways to Make $1,000 by FC Minaker, which he pulled off a library shelf at age 7. The book is full of great advice (although much of it is dated too) on how to start making money, but one recommendation at the beginning of the book inspired Buffett the most.
Minaker wrote:
“You will find many people who will laugh at the idea of learning how to make money from books. They will tell you that success in business depends on the skill and action inherent in trade. They will quote men who have never read a book in their lives and yet they made a lot of money in business. Do not be swayed by these opinions. There is no man who has started in business for himself, who has not shortened the time it took him to establish himself, by reading about what others had done.” .
Study hard and never stop doing it, Buffett’s only secret
Buffett began studying throughout his life starting with Minaker’s book and has never stopped. After college, he attended Columbia Business School, where he studied under legendary investor Ben Graham, whom Buffett later said was the second biggest influence on him after his father.
Graham was known as the father of long-term investment or value investing, which Buffett also practices, and which consists of thoroughly analyzing a company’s business and assets to assess their true value regardless of the price of their shares.
Graham advised buying with “a margin of safety,” advice that Buffett also replicates. In fact, it’s probably the explanation for one of Buffett’s most famous and perplexing quotes about investing: “Rule #1: Never lose money. Rule #2: Never forget Rule #1.”
Over the years, many investment experts have debated what it really means, especially since Buffett himself has sometimes suffered losses, as any investor of his scale would have to.
Buffett has also said that he built the first phase of his portfolio and his wealth by investing in companies that he compared to: companies that were undervalued by the market because they were out of style or out of fast-growing industries.
The trick, of course, is that you can’t find these margin-of-safety investments just by reading a few analyst reports; You have to really study his financial reports and other information, which is what Buffett spends a lot of his time doing.
Going back to Minaker’s idea: study hard.
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