The market veteran is known for his investing wisdom that will empower generations to come. When he was nine-years old, he rolled snowballs across his lawn, and saw it grow bigger and bigger, picking up more wet snow. “You have got to be the kind of person that the snow wants to attach itself to,” he told Alice Schroeder for the book The Snowball: Warren Buffett and the Business of Life, explaining how he used snowball as a metaphor for life.
Warren Buffett on compounding money
The market veteran said his ‘Snowball’ metaphor refers not only to compounding money, but also the world and what kind of friends one accumulates. “The snowball just happens if you are in the right kind of snow, and that’s what happened with me…You have got to be your own wet snow, in effect. You would better be picking up snow as you go along, because you are not going to be getting back up to the top of the hill again. That’s the way life works,” he said.Buffett famously explained compounding money with the ‘snowball effect’ metaphor for investors. A small ball rolling downhill gathers more snow the longer it rolls. Similarly small investments stepped up over time gathers strong returns for investors.
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“We started building this little snowball on top of a very long hill,” he said when a shareholder asked him how to make $30 billion at Berkshire's 1999 shareholders' meeting. “So we started at a very early age in rolling the snowball down, and of course … the nature of compound interest is that it behaves like a snowball," he added.
The "trick" to building a big snowball, according to Buffett, is “to have a very long hill, which means either starting very young or living to be very old.”
Warren Buffett passes the baton to son Howard Buffett
Warren Buffett stepped down as chairman of Berkshire Hathaway last month, passing the baton to his son Howard Buffett after spending more than half a century in the role and transforming a struggling textile business into a more than $1 trillion enterprise. In his letter to Berkshire’s shareholders, the legendary market investor recalled celebrating his 96th birthday in August this year and recognizing that it was time to move on. "Father Time always wins," he reflected.Buffett said he still has the best job in the world after having served sixty-plus years in Berkshire since 1965. “That is not something many people my age can say, and I have never felt better about what comes next,” he wrote. “Serving as your Chairman has been the privilege of a lifetime, and I have never taken your trust for granted. Father Time always wins. He has, however, been generous with me. He has given me the opportunity to see Berkshire reach a point where I am more confident than ever about what lies ahead. The company is in excellent hands, and I look forward to remaining a shareholder alongside you,” he added.
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While investors across generations continue to follow legendary expert Warren Buffett’s invaluable market advice, the billionaire’s frugal lifestyle also grabs the headlines and speaks volumes about his money-saving habits.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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