With a net worth of $86 billion, Warren Buffett is easily the most successful investor of our era.
Authors, editors and marketers have made millions promising to show ordinary mom-and-pop investors “how to invest like Buffett.”
Unfortunately, that’s not possible.
Buffett is a certifiable financial genius with nearly seven decades of experience. He has forgotten more about how to evaluate a business than most investors will ever know.
What’s more, it’s not necessary to try – and probably fail – to invest like Buffett.
You can let the world’s greatest money manager run a portion of your money, simply by picking up the Class B shares of his holding company, Berkshire Hathaway (NYSE: BRK-B).
Minimum investment? Approximately 200 bucks.
I’ve recommended the stock in our Oxford All-Star Portfolio for almost two decades now.
In a phone conversation last week with former Fox News television host Bill O’Reilly – a longtime subscriber – he said, “You’ve made me a ton of money with that one. And I still hold it!”
Anyone can and, in my view, should.
However, Buffett does have much to teach us about the markets – and the state of the world – if you’re prepared to listen… and willing to challenge your own preexisting notions.
It starts with understanding what I call Buffett’s “investment sensibility,” his perception of the state of the nation and the world.
It’s one that most folks would consider wildly contrary.
For example, according to RealClearPolitics, 55% of us say the country is on the wrong track and our children face a diminished future.
This is not a new development. The majority of Americans have been telling pollsters that for decades now.
And with the 2020 elections underway, politicians are coming out of the woodwork to paint the bleakest picture possible – just as they did four years ago.
Contrast this pessimism with two statements by Buffett during the last election:
For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs… And, yes, America’s kids will live far better than their parents did.
It’s an election year, and candidates can’t stop speaking about our country’s problems… As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.
That view is dead wrong: The babies being born in America today are the luckiest crop in history. American GDP per capita is now about $56,000… That – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.
Like all great stock investors, Buffett has an optimism about the future that simply doesn’t have an off switch.
How does he maintain it? By holding a clear-eyed view of what’s really happening in the world.
While the mainstream media focuses exclusively on problems and setbacks, he looks at dramatic advances in transportation, communications, agriculture, medicine, finance, manufacturing, aerospace, energy exploration and development, and dozens of other industries.
Here progress is generally incremental – and therefore not considered newsworthy.
But the cumulative effect is plain to see: greater longevity, higher living standards and record levels of prosperity, whether measured by wages, household income or household net worth.
As for the very real problems we do have, Buffett views most of them as opportunities.
I’ve spent years trying to show readers and conference attendees how most trend lines in the U.S. today are overwhelmingly positive.
Yet many simply won’t believe it. “Don’t you ever watch the news?” they ask, amazed.
“Occasionally,” I reply. And if you want to be a better investor, you’re well advised to do the same.
A new and credible study shows that the more mainstream media reports people consume, the less likely it is that their perceptions match reality.
It’s a counterintuitive finding, one that can’t help but have enormous implications for your investment portfolio and financial returns.
In my next column, I’ll explain why.