Warren Buffett attributes his success partly to being in the right place at the right time -- do we have similar opportunities in our place and time?
A couple of months ago, the world's second richest person, Warren Buffett, donated most of his wealth to the charitable foundation run my the worlds richest person, Bill Gates of Microsoft
(LSE: MSF)
. Valued at somewhere between $30bn and $40bn, depending on how the price of Berkshire Hathaway
(NYSE: BRK-A)
develops, this gift will make a significant impact on the lives of many people.
In an interview with Fortune magazine shortly afterwards, Buffet attributed his success not only to his own skills:
"I was wired at birth to allocate capital."
but also to the times in which he lived:
"In my case, the ability to allocate capital would have had little utility unless I lived in a rich, populous country in which enormous quantities of marketable securities were traded and were sometimes ridiculously mispriced. And fortunately for me, that describes the U.S. in the second half of the last century."
In a nutshell, "I was born with the right skills in the right place at the right time".
So where does that leave the rest of us? We can attempt to emulate the great man's skills, but are the same opportunities still available to investors today?
At a macro level, it is true that valuations are considerably higher now than when Buffett was starting out; the S&P 500 index is currently on an historic PE of about 20, versus 7 in 1950, so the days of dirt cheap equity markets are arguably gone.
On the other hand, the small investor today has many advantages that were not available in the early decades of Buffett's activity, for example:
- we have access to more convenient investment products -- trackers if we want to keep it simple, spread-betting and CFDs if we want to get fancy;
- due to easier transfer of capital, we have the ability to invest internationally with relative ease; and
- as our investments are relatively small compared to Buffett's, we have the ability to buy and sell shares in all but the smallest companies without affecting the market.
But most important of all, I believe, is the fact that we have easy access to mountains of detailed information (and misinformation) via the internet.
With over 3,000 companies quoted in the UK, and tens of thousands more available to us internationally, it would be absurd to think that they are all 'correctly' priced. There are bargains out there, although finding them is still a challenge.
Maynard Paton takes that challenge head-on with his Champion Shares service. Why not sign up now for a free 30-day trial?
Buffett: Enjoy 10% A Year Until 2016 | Big Winners For Small Investors
