Warren Buffet is not the best investor.

97% of Warren Buffet’s net worth was earned after his 65th birthday.

An unfortunate misconception is that being an effective investor needs to deliver exceptional results every time. That is not true

As of 11th October 2021, Warren Buffett’s net worth is $100.6 billion. Of that, $97.3 billion was accumulated after his 50th birthday. $97.6 billion came after he qualified for Social Security, in his mid-60s.

The real key to Warren’s success is that he’s been a consistent investor for three-quarters of a century. Had he started investing in his 30s and retired in his 60s, few people would have ever heard of him.

His skill is investing, but his secret is time.

Jim Simons, head of the hedge fund Renaissance Technologies, has compounded money at 66% annually since 1988. No one comes close to this record. As we just saw, Buffett has compounded at roughly 22% annually, a third as much. Simons’ net worth is $22 billion. He is 78% less rich than Buffett.

Why the difference, if Simons is such a better investor? Because Simons did not find his investment stride until he was 50 years old. He’s had less than half as many years to compound as Buffett. If James Simons had earned his 66% annual returns for the 70-year span Buffett has built his wealth he would be worth — please hold your breath — sixty-three quintillion nine hundred quadrillion seven hundred eighty-one trillion seven hundred eighty billion seven hundred forty-eight million one hundred sixty thousand dollars.

Therefore no credit must be stolen from Warren for his impeccable investing acumen. But entitling him as the best investor of all time would be “incomplete”. Though that exposes the gifts that the compounding tree bestows.

Hence an effective investor needs to deliver just good enough results to be in the game for another day. That’s when compounding will be your best mate.

This covers information from one of the best chapters I’ve ever read. It is from the book “The Psychology of Money” by Morgan Housel.