The REAL reason Warren Buffett is so wealthy…

Warren Buffett is worth over $100,000,000,000 (that is billion) at age 92. That is a staggering amount of wealth for anyone to build. There are thousands of books written about how he built his wealth, but I believe a massive part of his success comes from 1 thing that most people over look…

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A quick history lesson on Mr. Buffett:

If we go alllllll the way back to 1941, when Warren Buffett was just 11 years old, he did something that most kids his age don’t do: He bought some stocks.

He purchased 6 shares of Cities Service preferred stock at a cost of $38 per share. 3 were for him, 3 were for his sister. He later sold those shares for $40 each. A nice $2 profit! (and yes, I understand that $38 in 1941 is the equivalent of $756 in 2023)

Now, fast forward to 2023, he has a net worth of over $100 billion. While this number is staggering, the next question becomes…

How did he do it?

I was reading a blog post a while back by Morgan Housel from the Collab Fund & it covered Warren Buffett’s story.

The excerpt from the blog was titled “Underappreciating the power of compounding, driven by the tendency to intuitively think about exponential growth in linear terms”.

It went on to read that most people cannot conceptually understand how powerful compounding is. For example, if I were to ask you to calculate 8+8+8+8+8+8+8+8+8 in your head, it wouldn’t take you long to realize the answer is 72. However, if I were to ask you to calculate 8×8×8×8×8×8×8×8×8 in your head, it would not be a quick solution. You would probably need a calculator to find that the answer is 134,217,728.

Compounding is hard to conceptualize, but compounding is also VERY powerful when you give it time… and that is something Warren Buffett has done.

While he has had some good stock picks (Apple being one of them), the largest reason for his success is he has stayed invested for a LONG time. If you go back & read the post I made about why most investors UNDERperform the market, you will start to understand how Warren Buffett has been so successful at building wealth. He has been investing consistently for 75+ years. While he has made changes to his positions, his winners come from buying & holding over an extended period of time.

In his 2022 Letter to Shareholders, he wrote this:

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. And, yes, it helps to start early and live into your 90s as well.

So while picking good companies to invest into is very important, the key to Warren Buffett’s success is his ability to hold those winners over an extended period of time. There are thousands of books on how he built his fortune, but none of them are called “This Guy Has Been Investing Consistently For Three-Quarters of a Century” (from Collab Fund Blog).

This is why I invest for the long term. I buy into quality companies & hold them over the long run. It isn’t as sexy as trading, it isn’t as fun as trading, but ugly & boring works in investing.

I will leave you with this famous quote by the man himself, Warren Buffett:

“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

My Buys This Week:

This week I did my normal buys like always. Just like stated above, I keep my strategy simple, yet effective. DCA, buy weekly, don’t overthink, don’t try & time the market. Just buy.

ETFs: $250 in VOO + $100 in SCHD (from options income) +

Individual Stocks:

Tweet of the Week:

I got paid out by VOO for the Q1 2023 dividend. Here is a look at the last 5 payouts I have gotten from VOO:

Thank you so much for reading & I will see you next week! Until then, keep buying assets & stacking those dividends. 🙂 

- Decade Investor