Editor’s note: This article was first published in March 2012, when Buffett was third on the Forbes rich list; the rankings and figures it cites reflect that time.
Often, when people talk about how great geniuses got started (and let’s not doubt for a moment that Warren Buffett is a financial genius), they tell all sorts of stories about little details that already pointed to the success that person would go on to have. I don’t agree with these stories, because rather than motivating, they can end up being hugely demotivating for us ordinary mortals.
Is a genius born or made? We could say both answers are valid, since everyone is born with a gift. It’s just that sometimes, for one reason or another, many people never discover what their gift is, or simply never manage to make the most of it.
Newton discovered the theory of gravity by luck: if he hadn’t been under an apple tree when an apple came loose, he would never have discovered it. Are we sure? I ask because behind every invention there is usually a striking story, perhaps to avoid telling the truth, which is that a huge amount of effort and work goes into making the discovery. Apple or no apple, Isaac Newton would have put forward the theory of gravity.
A certain Pablo was told by his mother that if he became a banker, he would end up running the bank, and if he became a soldier, he would end up a general. Pablo became a painter instead, and ended up as Picasso, which is no small thing (although it didn’t make him a great deal of money in his lifetime).
The story of Warren Buffett goes that he was already doing business with his neighbours at the age of 6. Some say he bought newspapers and delivered them; others that he bought cans of soft drinks at a supermarket and resold them at a markup. It’s also said that he wasn’t caught up in the dot-coms when the bubble burst because, 60 years earlier, at the age of 7, he had learned an investing lesson from selling chewing gum.
Doing business at 6 makes his success look as if it was “written in the stars”, as if he was lucky to be born with that gift. The subliminal message these stories send us is that while Mr Buffett was doing business at 6, the rest of us were out playing in the street, and that’s why we could never be as successful as Buffett.
I knew a boy from my part of the world who supposedly had more talent than Buffett, since at 5 he was already quite the negotiator. At 11 he was making money at school by selling pencils, notebooks and even buns at break time. A future businessman with real potential. At 19 he went to prison for the first time, for dealing marijuana. At 25 he went back, for dealing cocaine. That boy had bad luck, while Buffett had good luck.
In this life, everything comes down to choices, although I do accept the one piece of luck that Buffett himself says he had: being born white and in the United States. Perhaps that was his only luck, because had he been born black in that era, many doors would have been closed to him, just as, had he been born in Somalia, he probably couldn’t have done business at 6 or even at 20.
Warren Buffett’s mastery
Warren Buffett prepared himself perfectly to make the most of his gift. As he tells it, buying and selling shares was a normal topic of conversation over meals at home. That was when Buffett decided he wanted to be rich when he grew up. Many of us had that idea too, just as others want to be astronauts.
The difference is that Buffett focused in the right way. While other children were reading The Little Prince, he was devouring the business and finance pages of the newspapers. He probably read hundreds of investment books to grasp what escapes many investors.
It’s said that by the age of 20, Buffett could already work out which company to invest in for the best return, with a smaller margin of error than the best-paid stock analysts on Wall Street. Of course, that isn’t luck: he simply studied more than they did, even before he went to university.
Warren Buffett’s greatest gift is common sense, and having a bit of common sense really is a bit of luck, because very few analysts have it. Perhaps that’s why they get more calls wrong than right: a stock chart says what the chart says, while common sense can tell you what will happen just from knowing a company’s track record, its plans and the thinking of a new management team.
Warren Buffett was lucky enough to have a great mentor, none other than Benjamin Graham himself, probably the best investor there has ever been. Then again, Graham also taught many other students who don’t make money on the stock market. Among the secrets of Mr Buffett’s success we could also include the good fortune of listening to the greats and putting what they knew into practice.
The fact is that Buffett went from earning 120 dollars selling sweets, newspapers and cans of drink to being the third-richest person on the planet and owning a company valued at more than 400 billion dollars, among others.
In short: behind every great fortune, some people see luck where others see a great deal of effort, dedication and hard work. It would be unfair, and even unhealthy, if someone less prepared, putting in far less effort, reached the same goal as a person who had devoted their life to it.
Further reading
- Investing like Warren Buffett: tips and guidelines
- 7 Warren Buffett quotes
- The only secrets to getting rich (there are no others)
Featured image: It's No Game from Leicestershire, UK, CC BY 2.0, via Wikimedia Commons.
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