When Warren Buffett Talks, Listen!
“When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients,” said the Oracle of Omaha.
I don’t know about you, but when Warren Buffetss speaks, I straighten up and listen. So when he says that people should buy cheap index stocks instead of trying to beat the market you best believe I am refuting. If you see no reason no listen to him simply based on that then get this:
Warren Buffett has made billions—yes, billions—over the decades and has also made a ton load of money for those for were smart enough to invest into his company.
This month is the month that his annual letter to shareholders is sent. In it, he advises the average investor to buy regular index funds rather than going after hot sector dessimating life savings just to invest it in high-fee hedge funds.
According to the billionaire, all investors—both large and small—should stay with low-cost index funds.
“The problem simply is that the great majority of managers who attempt to overperform will fail. The probability is also very high that the person soliciting your funds will not be exception who does well,” Mr. Buffett wrote in his letter.
Mr. Warren Buffett bought a company that a lot would stay away from—a failing company in 1964. It was an insurance company in Omaha, ergo, the Oracle of Omaha. Omaha is city in the American state of Nebraska. Fast forward over 5 decades later and his company, Berkshire, has seen its shares average a compound annual return of about 20% per annum. This includes dividends.
Buffett is now 86 and shows no sign of slowing down.
“I believe my calculation of the aggregate shortfall is conservative,” he wrote in the letter.