This article is a part of GOBankingRates‘ “Money on the Air” series. Vote for your favorite podcaster or radio show host — and check back for more interviews with them — here on GOBankingRates throughout March.
If you’re interested in finance, trying to crack the secret of Warren Buffett‘s success is as entertaining as it is maddening — an enticing Rubik’s cube for anyone looking to get rich. Buffett’s success is so elusive — and so far, unreplicated — that it took a team of Yale academics to determine the Oracle of Omaha does not owe his $73 billion fortune to magic.
“Buffett’s returns appear to be neither luck nor magic,” found a 2013 research paper published on Yale’s website, which boiled down Buffett’s actual secret sauce to “reward for use of leverage combined with a focus on cheap, safe, quality stocks.” (Not-so-secret, really: Buffett admitted to this strategy more than 30 years ago.)
Still, if asked to explain the source of his “alpha,” Buffett is as divided as his devotees — at times shmaltzy (“I found what I love to do very early”), other times coy (“You can’t produce a baby in one month by getting nine women pregnant”) and more often than not, completely blunt: “‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
We interviewed some of America’s biggest money experts, and threw them a gauntlet: Tell us the secret to Warren Buffett’s success.
Here’s how they explained the Oracle’s track record.
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12 Experts on Why Warren Buffett Is Successful
1. His No. 1 focus is growing his wealth
According to Brandon Turner, real estate investor and co-host of “BiggerPockets Podcast,” Buffett has a single-track mind — and that’s worked well for him.
“I think Warren Buffett succeeded because he focused 100 percent on growing wealth above all other things,” Turner said. “He made it a point to continue his education his entire life and stick to sound business principles.“
2. He invests in businesses that aren’t competitive
“Warren Buffett identifies companies that generally don’t face an enormous amount of competition, and holds them for years — or forever,” said Clark Howard, a consumer expert and host of “The Clark Howard Show.” “His failures have tended to be in businesses that were too competitive.”
3. He doesn’t scare easy
Andrew Horowitz, CFP, author and host of “The Disciplined Investor,” told us Buffett owes his wealth to one factor: “Time. He has a holding period that appears to be infinite so he does not get spooked by market moves. He also knows that the best time to buy is when everyone else is selling.“
4. He doesn’t let his ego get in the way
Journalist Emma Johnson, host of “Like a Mother with Emma Johnson,” mentioned Buffett’s famous penchant for value investing — but said his real X-factor was his personality.
“As an investor, Buffett’s success is well-documented — he buys easy-to-understand companies with reasonable management and an intrinsic value. So easy, anyone can understand it,” Johnson said. “But Buffett’s success as a beloved public character is the real magic. We can attribute that to his humble persona: We love him for his habits that include banjo-playing, cheeseburger devotion and that he has lived in the same, relatively modest house in not-so-glamorous Omaha for 55 years. That he is self-made and earned 99 percent of his wealth after age 50 inspires us to believe that success is possible for all of us, and his adherence to a modest life of family and charity are great lessons on wealth that apply to us all. He’s both fabulous and accessible, and we love him for it.”
5. He takes advantage of a simple and age-old combination
Buffett uses a straightforward formula that pays off for anyone who gives it the time, said John Lee Dumas, founder and host of the podcast “Entrepreneur On Fire“: “Compound interest plus patience.”
6. He sticks to what he knows
“I don’t know much about Warren Buffett other than I’ve heard that he invests in what he ‘knows‘ and/or has ‘learned,'” said Matt Theriault, host of the podcast “Epic Real Estate Investing.” “In my experience, with the right education and information backing investment decisions, most people would be a success.“
7. He’s aggressively anti-stupid
According to Stephen Dubner, co-author of the best-selling “Freakonomics” series and host of “Freakonomics Radio,” Buffett has an unerring sense for what is just plain dumb.
“I have no idea how much of his success is due to smarts versus luck and all the additional advantages that are conferred on someone who becomes successful. (Those are important and should never be discounted).” Dubner told us. “But one thing that always impresses me about him is how aggressively anti-stupid he is. It’s not that he’s not willing to take risks; it’s just that he has a great sense of behaviors that are, whether in the moment or in retrospect, plainly stupid — and yet many people are willing to engage in patently stupid behavior because they’ve somehow convinced themselves it’s not stupid.”
8. He tries to be the best at one thing
Buffett focuses all his energy in one place, according to Laura Adams, a personal finance expert and host of “Money Girl.”
“Buffet’s success seems to come from passion for his work, good mentors early in his career, and striving to be the best at one thing — his consistent knack for identifying undervalued companies to invest in,” she said.
9. He thinks years in the future
Most investors are too short-sighted, Chris Hill, host of “Motley Fool Money,” told us.
“While many on Wall Street are thinking about the next quarter, Warren Buffett is thinking about the next five, ten, and twenty years,” he said. “That may seem like a small thing, but it is a radical departure from the short-term mindset that drives so much trading activity. It’s also why Buffett is the greatest investor we will ever see in our lifetimes.“
10. His investments are diversified and long-term
“He has said it many times: He invests only in things he understands (relying on his common sense, which we all have), he doesn’t put too much of his money into any one investment (called diversification), and his holding period is “forever” (called a long-term approach),” said Ric Edelman, chairman and CEO of Edelman Financial Services, and host of “The Truth About Money with Ric Edelman.” “The best part is that anyone can replicate the strategy used by Warren — and since it made him the world’s most successful investor, we all can become financially successful, too!“
11. He plays the No. 1 game for investors
When Robert Kiyosaki — inveterate investor and founder of “Rich Dad Radio Show” — was young, he learned about business and money by playing Monopoly.
Apparently, the Oracle of Omaha invests like he’s played the game a couple times himself. “He, too, plays the game of Monopoly in real life,” Kiyosaki told us.
12. He’s a “go-giver”
Farnoosh Torabi, financial strategist, author, and host of “So Money with Farnoosh Torabi,” told us Buffett’s truly outstanding factor is his largesse.
“He’s a go-giver,” she said. “He’s incredibly philanthropic and I’ve discovered from countless interviews with some of the most successful people on the planet that being a giving person with your money, time, ideas yields abundance in your life. Warren, consistently ranked as one of the world’s wealthiest individuals, has pledged to give away 99 percent of his fortune. That’s outstanding.”
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