Praveen Chawla
Even Warren Buffett Thinks Picking Stocks Is Hard
Danny Noonan
Warren Buffett is arguably the greatest investor of all time.
In his recent shareholder letter, even he—the Oracle of Omaha—admitted how hard it is to consistently pick winning stocks.
Here’s how Buffett summed up nearly six decades of managing money:
“At this point, a report card from me is appropriate: In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so. In some cases, also, bad moves by me have been rescued by very large doses of luck. (Remember our escapes from near-disasters at USAir and Salomon? I certainly do.) Our satisfactory results have been the product of about a dozen truly good decisions—that would be about one every five years—and a sometimes-forgotten advantage that favors long-term investors such as Berkshire.”
Buffett boiled down the lesson for investors:
“The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders.”
A few big winners carry most of the freight in an investing lifetime. In a hypercompetitive world, the idea that important investing decisions need to be made on a daily basis couldn’t be further from the truth.
As Buffett’s partner Charlie Munger is fond of saying, “The big money is not in the buying and selling, but in the waiting.”
Toby Bloom
