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Why Do Warren’s Words Carry Weight?


Why Do Warren’s Words Carry Weight?

“When [Warren Buffet] talks, people listen.”

Those who are old enough might know that this is a play on the old E.F. Hutton ad.

Related to this, someone recently asked me, “How did Warren Buffett attain the admiration of top investment professionals and the investing public alike?”

I smiled and responded:

“The old-fashioned way, he earned it.”*

Warren Buffett has unique personal I.P that can be summed up in two words.

Experience & Respect

He has seen it all.  The good, the bad and the ugly.

Buffett is also a proven investment superstar who has not just talked the talk, but has walked the walk.  Versus a theory or hypothetical model, behind his words is a solid track record of success over many market cycles, which even other investing outliers look up to and value.

This is why it’s so powerful when the person whom many consider to be one of the best active investment managers of both public and private equity of all time says the following with respect to how his family trust should be invested:

“Put 10% of the cash in short‐term government bonds and 90% in a very low‐cost S&P 500 index fund” because “the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, individuals—who employ high fee managers.” – Warren Buffett (see Can I Do Better? for references to instructions Buffett has given to the trustee of his family trust)

People do listen to Warren Buffett, but in spite of his consistent recommendations (click here for more of his advice to other superstars such as LeBron James) and the evidence (click here for the facts on historical performance of investment funds), much time, and investors’ money, continue to be spent on the search for shiny, new, complex and high fee holy grail-promising investment funds.

Maybe the title of my next piece should be:

Why don’t more people follow Warren Buffett’s advice?

*Below is one of the best investment ads of all time (click to view).  Now if only the evidence showed that Wall Street investment analysts’ recommendations were consistently accurate (for more read Ground Hog Day).

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