Who’s the Greatest Investor of All Time?
April 6th, 2022
On the surface, this seems like a pretty easy answer. I think most people would probably guess that Warren Buffett is the greatest investor of all time. He’s the most well-known and likely quoted more than any other professional investor. As of today he is 91 years old and to the naked eye he looks just like a sweet ole granddad. I’ll refer to him as WB for the rest of this story.
But is he the greatest investor of all time? I think you probably have to define what you mean when you ask the question. If you are looking for the wealthiest investor of all time, then he’s the guy. But if you are looking for the person with the best returns of all time, then the answer is different. That would be Jim Simons, and it’s not even close. When you search his name, Wikipedia says he is a mathematician, a hedge fund manager, a philanthropist, and you guessed it…a billionaire.
His returns have been triple that of what WB’s have been but Buffett has much more money. How could this possibly be? Easy answer.
Time.
WB has been investing for over 70 years and that time has allowed him to enjoy one of the most powerful things that exist, compounding interest.
99% of his wealth was accumulated after his 50th birthday. I guess this should give me hope that I could become a multi-billionaire since I am only 52. I can hear you say, “But Lee, you are still young. I don’t have that much time.” Most of my clients are in their 60s so let me provide further perspective. He accumulated 97% of his wealth after age 65. That should give you hope. It’s pretty crazy when you think about it that way.
Full disclosure, I have no desire to become a billionaire. None. Zero. Zilch. Nada. Most billionaires sacrifice something to get there. In many instances their family is the first thing that goes. There are literally hundreds of books that have been written about him, and some of them chronicled how he would come home late from work, only to walk past his kids and go upstairs and start diving into complex analytical reports researching different companies. He’s a data freak, and that’s what he does.
Had he retired at age 60 like most folks do, he would have had a couple of hundred million dollars and no one would have ever known his name. The most famous Buffet would likley be the flip-flop wearin’- margarita drinkin’ Jimmy Buffet. But this Buffett is wired differently than most folks.
Time is one of the things I talk about frequently. I usually talk about it in the context of how you spend your time. Don’t spend time watching the news, it’ll make you mad. Spend that time with the people you are closest with doing the things that you enjoy doing.
Time in this context goes hand in hand with the time in the context of investing. Time is everything and the thing that is easiest for us to interrupt. We’ve had some volatility in the first part of the year and this sometimes causes people to shift to a short term time frame rather than a long period of time. We must all resist this urge even though the temptation is very real.
Fortunately, none of my clients have told me they want to bail. That’s almost never the right thing to do. The statistics against bailing are overwhelming, but we are humans with emotions and those emotions guide our actions.
So how do I measure success for my clients? I’ll tell you that it’s much different than how it was 15 years ago. Early on, I thought there was nothing more important than an annual return. The industry wants us to all focus on this and truthfully, things are set up for us to measure short term results. This is why custodians send us monthly and quarterly statements.
Now after helping several hundred families navigate the waters of retirement, success is more often measured by the amount of enjoyment and fulfillment of dreams that you’ve worked your lifetime for. I now spend more of my time now helping clients with a spending plan. That’s right. A spending plan. As people come to the realization that they need to start spending money while they are young enough and healthy enough to enjoy it, sometimes they want to discuss those plans to make sure they are making wise decisions.
One of the most enjoyable parts of what I do is hearing some of the ideas that my clients have. Several clients are now paying for really neat trips for their kids and grandkids. I realize that not everyone can afford that, but it you can, it’s a very nice thing to do.
So no matter how you define success, make sure you are able to enjoy the fruits of your labor.
