Legendary investor Warren Buffet made a statement that drove most people on Wall Street to lose their minds by saying that he would rather gamble his money on monkeys with throwing darts to outperform financial advisors. He surely knows his way with words.
Many financial advisors felt uncomfortable with the remarks of this 91-year-old billionaire— a point which he has been highlighting for years. In this article, we will come to grips with what Buffett actually means and why it is a piece of great news for you as an individual investor.
Wealthy people in today’s world mostly got rich through their investments. If you’re lucky enough, you could be an overnight millionaire. But if you’re unlucky, you could straight up on the streets.
Although the investing game could go well, there’s also a chance that you’ll end up broke— this is where Wall Street and professional financial advisors come in. These so-called financial experts make you feel that you badly need them by making investing sound complicated. Since most people want to play safe and avoid losing money, they would just entrust their money to these people.
The chances of getting extremely rich by seemingly doing nothing make people lose sound judgment. They sell their houses, borrow money they can’t afford to pay back, and spend the college funds of their children, which carries a ripple effect on the market.
TikTok, a popular social media app, has become an outlet where people get their investment advice. Many users on the platform make a video about something they bought that increased in price over time. They encourage people to go for the age-old “buy low, sell high” investment strategy.
If you have watched the Wolf of Wall Street, you must have known Jordan Belfort, who rose to prosperity by exploiting other people’s desire to earn a lot of money in just a short span of time.
Time is the most vital part of investments. Unfortunately, this is the part where people often fail because they want “instant” money. What’s ironic is that many aspiring investors invest all of their resources trying to bring the time down when, in reality, you would want as much time as possible in investing.
Warren Buffett As A Legendary Investor
There contradictory discussions as to whether Buffett is the world’s most successful investor or not, but what you might fail to understand is how he acquired his status and how he made so much money.
Maybe you think it’s because he has studied a lot of companies, which gave him enough knowledge to make the right calls in many instances. But it’s not just all about the knowledge; it was actually his patience to wait for decades to make his money grow.
Warren Buffett bought his first stock back when he was 11 years old, which is more than 80 years from now. If you would calculate the years, that’s probably almost twice the years that most of us have been alive!
One of the biggest misconceptions among investors who try to copy Warren Buffett is that his secret to investing success was his knowledge. But knowledge alone isn’t his success, buddy— it was time.
The returns that Buffett was getting in his investments weren’t even that high to the point that if he retired in his 60s, no one would probably have ever heard of him since the vast majority of his wealth came in after he passed his 60s. Before then, he was just another long-term investor like most people.
If you copy Warren Buffett’s strategy in investing, you’d probably not get rich within the next five to ten, or even fifteen years!
Investing is simple, and people who want to take advantage of your cluelessness are the ones making it complicated. After all,
many investors and other financial advisers didn’t get rich from investing their money. They make money by telling you how to invest your own money, so whether you make a profit or not, they will still make money.
If chances, you lose your money through a financial advisor, you would still need to pay the financial adviser, which takes us back to the monkey quotes.
Why People Lose Money in Investing
One of the primary reasons why investors lose money is because they overleverage, putting the money in an investment they cannot even afford to lose. A lot of investors also try timing the market, trying buying stocks as low as possible.
According to Buffett, timing the market isn’t a reliable strategy because no one can take a glimpse into the future.
If you would ask who is the wealthiest investor in the world, the answer would probably be Warren Buffett. But if you would ask who is the most successful investor in the globe, that would be Jim Simons.
Buffett’s yearly return reaches only about 21%, while Jim Simon’s returns annually reach 66%. Simon is more than three times more successful than Buffett.
The Good News
If you want to make a substantial amount of money, the returns you can get in a year aren’t really that important. You can’t also trust financial gurus to triple your money in a matter of 6 months or even less. Instead, you should focus on the maximum return you can get over the longest period of time.
To put things simply, if you want to succeed in your investing journey, you have to pay attention to consistent returns, even if it isn’t as high as Jim Simon’s. A big chance of success will come if you could keep as little as 10% returns for 20, 30, or 40 years.
At the time of writing, the market is in the red, and almost everything is on the decline— which is a good opportunity for you to come out and buy stocks at a great discount. If you’re serious about investing, you should regularly do it regardless of the ups and downs of the market.
