Warren Buffett’s investment returns have been astounding. He has consistently beaten the S&P 500 over a long time period and has been able to break his investing philosophy into simple terms in order to inspire a generation of value investors.
While his achievements may seem to be something of a one-off, the reality is that another individual could replicate and even surpass his achievements. After all, investing is now more widely accessible than it was even a couple of decades ago, and this could make it easier for more people to deliver on their investing potential over the coming decades.
When Warren Buffett started investing, it was incredibly challenging to obtain information on listed companies. The speed of news being disseminated was relatively slow, and the regulatory framework which helps to protect investors today was relatively undeveloped.
In contrast, private investors today enjoy a wealth of free information on the internet. Annual reports, analyst views and a range of other sources provide the opportunity to understand a specific company or sector to a high level. This could help investors to make better-informed decisions than at any point in history, and may mean that potential returns improve.
Furthermore, the internet has cut the cost of buying and selling stocks. Previously, a percentage fee would be charged, with there being a relatively high minimum amount that priced smaller investors out of the market. Now, though, aggregated orders can mean that smaller investors, such as younger investors starting out, are able to learn from their mistakes at a relatively young age. Ultimately, mistakes make an individual better at investing, and could provide the foundation for higher returns in the long run.
Despite the opportunity for other investors to surpass Buffett’s successes in future years, changing attitudes towards investing may make this less likely. The Sage of Omaha is famous for being patient. He only buys a stock when it is deemed to be extremely appealing and prefers to sit on cash in order to only invest in the very best opportunities. He also holds stocks for a significant period of time, and shows little interest in crystallising any paper profits he has accumulated.
It could be argued, however, that many investors of today prefer to invest over shorter time periods. They may feel that the world is moving at an increasingly fast pace, and that they should adopt a more active strategy than that of Warren Buffett. While this could lead to success in terms of investment returns, it may mean that more effort is required on the part of the investor. As a result, interest in long-term, value investing strategies may decline to some degree.
While Warren Buffett’s success will be difficult to replicate, it is possible for another investor to match or even surpass his achievements. With a wealth of information available to investors, buying stocks has never been cheaper or simpler. And with global stock markets having experienced a correction of late, there could be a number of value investing opportunities available at the present time.
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