, founder of the hedge fund Renaissance Technologies, has compounded money at 66% annually since 1988. No one comes close to this record. As we just saw, Buffett has compounded at roughly 22% annually, a third as much.Why the difference, if Simons is such a better investor? Because Simons did not find his investment stride until he was 50 years old. He's had less than half as many years to compound as Buffett.
The danger here is that when compounding isn't intuitive, we often ignore its potential and focus on solving problems through other means — because we're overthinking, but because we rarely stop to consider compounding potential.There are books on economic cycles, trading strategies and sector bets. But the most powerful and important book should be called "Shut Up And Wait." It's just one page with a long-term chart of economic growth.
The practical takeaway is that the counterintuitiveness of compounding may be responsible for the majority of disappointing trades, bad strategies and successful investing attempts. You can't blame people for devoting all their effort to trying to earn the highest investment returns. It intuitively seems like the best way to get rich.
But good investing isn't necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can't be repeated. It's about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That's when compounding runs wild.
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MakeIt Actually the most overlooked fact is that he was lucky to begin putting money to work at the very beginning of a monster long term pro American exceptionalism, capitalism and bull market. We’d have never heard of him has he started investing in the late 60’s.
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MakeIt Main-street investors who try to emulate him should read this
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MakeIt CNBC is in love with Warren Buffett.
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MakeIt What a wasted life. All that money and he hasn’t stopped to enjoy it. Greed over quality. How stupid.
MakeIt DaProfessional2 This quote from the article is ALL you. 'Effectively all of Buffett’s financial success can be tied to the financial base he built in his pubescent years and the longevity he maintained in his geriatric years. ' Your youth causes the most wealth creation.
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MakeIt compounding returns because of investment over 70 years. saved you all a click
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