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That’s different than what your article claimed. It said it was all luck. I have no trouble believing that there is someone theoretically more talented than Wa

by graeme 7y ago

That’s different than what your article claimed. It said it was all luck. I have no trouble believing that there is someone theoretically more talented than Warren Buffett who a less lucky life. I have great difficulty believing Buffett is untalented.

toomuchtodo 7y ago
Any of his investments could've gone bad through no fault of his own. You can be the smartest person in the room and still get punched in the face, metaphorically, when an unknown unknown presents itself. Buffett himself bet $1 million that index funds were superior to active management (and won) [1]. [1] http://longbets.org/362/ http://longbets.org/362/
- graeme 7y ago
  Buffett did make that bet. And he believed it to be true for most investors. But he also notably believes some investors can do better than the market. See this: https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-a... Buffett did have losses! And made mistakes. And you’re missing the point. I’m not arguing Buffett himself didn’t have luck. He himself has written extensively about this. But he also had skill. Luck + skill. Why some believe it must be one or the other and not both baffles me.
  - deleted 7y ago
    [deleted]
  - viklove 7y ago
    He had luck + skill, but he would not be successful if he did not start with wealth, from his rich father.
    - graeme 7y ago
      Sort of. I'd say the best things he got from his father were: * A good upbringing * Early exposure to stock brokering (his dad ran a small brokerage) * Being sent to university and having his costs covered Warren actually made the bulk of his early money himself, I think. He ran an enormous paper route operation, and also repaired and sold pinball machines at a large profit. He started all this around age 11 and it grew from there. He had amassed $5,000 by age 14. But not having to take money out for university made a lot of difference I expect. It would have cut his compounding. I don't remember him getting much in the way of inherited wealth from his father though. It's been over a year since I read his bio, so perhaps I'm misremembering. Happy to be corrected if you have specific info.
      - danans 7y ago
        The biggest advantage wealth affords that it allows you to fail, and then get up to try again, because you haven't lost your basic life security (a roof over your head, good food, education, community, healthcare when you're sick or injured). You get the freedom to experiment without fear of dire consequences, whether that's by building a paper route, repairing pinball machines, or expanding your family's business partnership to buy a textile mill called Berkshire. If, however, you are child who has to work to put food on the family table, or pay the rent, you're playing a whole different game, one that has life and death implications. Of course Buffett isn't unique in having the advantage of a financially stable and prosperous family and household. Clearly his entrepreneurial streak started early. But compared to the average person of his time, he did have extraordinary advantages, including a university education, and exposure to investing from an early age through is father's brokerage firm. His experience is not directly comparable to that of most Americans.
        kavalg 7y ago
        This exactly. The amount of money that you are willing to throw away at an investment without any internal resistance is what makes a difference. For many people even though talented, this amount is close to zero. Even more so, if you grow up with this mentality, it is a lot harder to change when you are e.g. in your 30s and already have some buck behind your back to eventually invest in something other than education/property.
    - kortilla 7y ago
      Why do you think that? A significant chunk of millionaires and billionaires are self-made.
- ericd 7y ago
  The best poker players lose hands all the time. But over time, they win consistently against less talented players. Talent increases your surface area to catch luck.
  - viklove 7y ago
    Not if you go broke on your first or second hand. Most of us only have enough cash to play one or two hands. If you're the son/daughter of a million/billionaire though, you get to play way more hands, and thus have a much better chance of being successful. Talent doesn't increase surface area, it increases the probability of success. Wealth is the only thing that can increase surface area. See the problem here?
    - sg47 7y ago
      Why are you going 'all in' in your first or second hand?
      - danans 7y ago
        To continue the metaphor, the table stakes at the tables that provide the big payoffs require the average person to go "all-in". Whereas a billionaire usually gambles on the margins of their wealth. They definitely don't gamble with the roof over their head or their next meal, or their childrens' security. They can make any non-ergodic game appear ergodic for longer since they can survive many losing hands for far longer than others.
viklove 7y ago
You're right, not pure luck -- it's 99% luck and 1% talent. If Buffet was born the child of a goat herder in Azerbaijan, he would not be anywhere near the position he is today. Basically, if Buffet's father was anything other than a US Rep and businessman, he never would've stood a chance. He would be working 40 hour weeks making someone else rich like the rest of us.
- sg47 7y ago
  I don't think the comparison is between Buffet and a goat herder. It's between Buffet and everyone else that had the same money to invest.
- graeme 7y ago
  Correct me if I'm wrong, but I don't think Buffett got all that much money from his family. Probably the best part of his upbringing was early exposure to stocks at a time they were not popular, and having school expenses paid. Lucky, but not like he was handed $1 million, which seems to be what you're implying. He made his early money repairing and selling pinball machines at a profit, and running a massive paper route operation. He started around age 11 or so.
  - lotsofpulp 7y ago
    He got something worth more than $1M. A father who was a US Representative who was smart enough to be operating his own investment firm, and who was probably able to guide him to the right schools and network of people to magnify odds of success. Knowing the right people is such a huge lever in the investment business, especially back in those days without computer trading and internet.
- jryle70 7y ago
  "99% luck and 1% talent" essentially means Buffet's success is down to luck. There are many many people who were born as privileged as Buffet was, who got as many doors opened as he did, but there is only one Buffet. He may be extremely lucky, or he is a genius. It's impossibly hard to quantify the reasons. > Basically, if Buffet's father was anything other than a US Rep and businessman, he never would've stood a chance. He would be working 40 hour weeks making someone else rich like the rest of us. Mark Cuban was a counter example. Or Oprah Wilfrey. They stood a chance despite not having rich parents.

by graeme 7y ago

toomuchtodo 7y ago

Any of his investments could've gone bad through no fault of his own. You can be the smartest person in the room and still get punched in the face, metaphorically, when an unknown unknown presents itself. Buffett himself bet $1 million that index funds were superior to active management (and won) [1]. [1] http://longbets.org/362/ http://longbets.org/362/

graeme 7y ago
Buffett did make that bet. And he believed it to be true for most investors. But he also notably believes some investors can do better than the market. See this: https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-a... Buffett did have losses! And made mistakes. And you’re missing the point. I’m not arguing Buffett himself didn’t have luck. He himself has written extensively about this. But he also had skill. Luck + skill. Why some believe it must be one or the other and not both baffles me.
- deleted 7y ago
  [deleted]
- viklove 7y ago
  He had luck + skill, but he would not be successful if he did not start with wealth, from his rich father.
  - graeme 7y ago
    Sort of. I'd say the best things he got from his father were: * A good upbringing * Early exposure to stock brokering (his dad ran a small brokerage) * Being sent to university and having his costs covered Warren actually made the bulk of his early money himself, I think. He ran an enormous paper route operation, and also repaired and sold pinball machines at a large profit. He started all this around age 11 and it grew from there. He had amassed $5,000 by age 14. But not having to take money out for university made a lot of difference I expect. It would have cut his compounding. I don't remember him getting much in the way of inherited wealth from his father though. It's been over a year since I read his bio, so perhaps I'm misremembering. Happy to be corrected if you have specific info.
    - danans 7y ago
      The biggest advantage wealth affords that it allows you to fail, and then get up to try again, because you haven't lost your basic life security (a roof over your head, good food, education, community, healthcare when you're sick or injured). You get the freedom to experiment without fear of dire consequences, whether that's by building a paper route, repairing pinball machines, or expanding your family's business partnership to buy a textile mill called Berkshire. If, however, you are child who has to work to put food on the family table, or pay the rent, you're playing a whole different game, one that has life and death implications. Of course Buffett isn't unique in having the advantage of a financially stable and prosperous family and household. Clearly his entrepreneurial streak started early. But compared to the average person of his time, he did have extraordinary advantages, including a university education, and exposure to investing from an early age through is father's brokerage firm. His experience is not directly comparable to that of most Americans.
      - kavalg 7y ago
        This exactly. The amount of money that you are willing to throw away at an investment without any internal resistance is what makes a difference. For many people even though talented, this amount is close to zero. Even more so, if you grow up with this mentality, it is a lot harder to change when you are e.g. in your 30s and already have some buck behind your back to eventually invest in something other than education/property.
  - kortilla 7y ago
    Why do you think that? A significant chunk of millionaires and billionaires are self-made.
ericd 7y ago
The best poker players lose hands all the time. But over time, they win consistently against less talented players. Talent increases your surface area to catch luck.
- viklove 7y ago
  Not if you go broke on your first or second hand. Most of us only have enough cash to play one or two hands. If you're the son/daughter of a million/billionaire though, you get to play way more hands, and thus have a much better chance of being successful. Talent doesn't increase surface area, it increases the probability of success. Wealth is the only thing that can increase surface area. See the problem here?
  - sg47 7y ago
    Why are you going 'all in' in your first or second hand?
    - danans 7y ago
      To continue the metaphor, the table stakes at the tables that provide the big payoffs require the average person to go "all-in". Whereas a billionaire usually gambles on the margins of their wealth. They definitely don't gamble with the roof over their head or their next meal, or their childrens' security. They can make any non-ergodic game appear ergodic for longer since they can survive many losing hands for far longer than others.

viklove 7y ago

You're right, not pure luck -- it's 99% luck and 1% talent. If Buffet was born the child of a goat herder in Azerbaijan, he would not be anywhere near the position he is today. Basically, if Buffet's father was anything other than a US Rep and businessman, he never would've stood a chance. He would be working 40 hour weeks making someone else rich like the rest of us.

sg47 7y ago
I don't think the comparison is between Buffet and a goat herder. It's between Buffet and everyone else that had the same money to invest.
graeme 7y ago
Correct me if I'm wrong, but I don't think Buffett got all that much money from his family. Probably the best part of his upbringing was early exposure to stocks at a time they were not popular, and having school expenses paid. Lucky, but not like he was handed $1 million, which seems to be what you're implying. He made his early money repairing and selling pinball machines at a profit, and running a massive paper route operation. He started around age 11 or so.
- lotsofpulp 7y ago
  He got something worth more than $1M. A father who was a US Representative who was smart enough to be operating his own investment firm, and who was probably able to guide him to the right schools and network of people to magnify odds of success. Knowing the right people is such a huge lever in the investment business, especially back in those days without computer trading and internet.
jryle70 7y ago
"99% luck and 1% talent" essentially means Buffet's success is down to luck. There are many many people who were born as privileged as Buffet was, who got as many doors opened as he did, but there is only one Buffet. He may be extremely lucky, or he is a genius. It's impossibly hard to quantify the reasons. > Basically, if Buffet's father was anything other than a US Rep and businessman, he never would've stood a chance. He would be working 40 hour weeks making someone else rich like the rest of us. Mark Cuban was a counter example. Or Oprah Wilfrey. They stood a chance despite not having rich parents.