Berkshire Hathaway star followed Warren Buffett's advice: Read 500 pages a day

[cyclone]

Berkshire Hathaway star followed Warren Buffett's advice: Read 500 pages a day

Kathleen Elkins
March 28, 2018

Todd Combs, an investment lieutenant at Berkshire Hathaway, got great advice the first time he encountered his current boss, Warren Buffett, in 2000, the year he started his MBA at Columbia Business School. The Oracle of Omaha was speaking to Combs and 165 other students during an investing class.

In response to a question about how to prepare for an investing career, Buffett told the students, "Read 500 pages like this every day," while reaching toward a stack of manuals and papers. "That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it."

Combs, now 47 and a protege of the Berkshire Hathaway CEO, took the advice to heart. As he began his investing career, he read even more, sometimes hitting up to 1,000 pages a day.

More details in https://www.cnbc.com/2018/03/27/warren-b...a-day.html

[Behappyalways]

Charlie Munger praises this 1 trait of Warren Buffett's—without it, 'you won't get very far in life'
https://www.cnbc.com/2019/04/21/billiona...-life.html

[karlmarx]

Reading lots is perhaps only one half of what is required to improve an investor's prospecting ability.

What WB and CM does not emphasize is the need to reflect on whatever was read, and where possible, synthesize it with your existing knowledge bank, and amend your intellectual framework.

In effect, this is what academic scholars do.

[specuvestor]

Reading lots is perhaps only one half of what is required to improve an investor's prospecting ability.

What WB and CM does not emphasize is the need to reflect on whatever was read, and where possible, synthesize it with your existing knowledge bank, and amend your intellectual framework.

In effect, this is what academic scholars do.

I’m not sure they are keen to be compared to academic scholars Maybe main difference is they adjust it to the real world application.

[karlmarx]

Of course not. Money managers and analysts want to be seen as rock stars, not boring geeks!

I'm not sure if any of the big asset managers employ analysts/managers that spend their time reading hundreds of pages of anything...I'm guessing that more of their time is spent on financial modelling and meetings with management?

[opmi]

Reading a lot is like having a lot of 'raw materials' to work with.

I think a more valuable skill is the fast recall of what you read and ability to quickly associate facts from different sources.
How to identify or test for it? I dont know.

[specuvestor]

I think read a lot to understand the history and track record, as well as to hone the mind towards multi disciplinary, is just as important as “quant” including simple modeling, accounting, projection etc and meeting management to understand their integrity and business models, strategic positioning, plans, Porter’s 5 forces, capex etc

Investing is not easy.

[dreamybear]

In the first place, how many people can read 500 pages a day ? Even when studying in universities, I dun think we read 500 pages a day(ok maybe it's only me). We are obviously not talking abt reading some entertainment news; certainly in the context of investing, the info to be read requires some thinking or sometimes even further research to understand what we are reading.

People like WB are at the top of the industry, just like C Ronaldo(soccer), M Phleps(swimming), etc. To achieve extreme success, you need to take extreme measures. The kind of committment they make is simply astonishing. For e.g. for young athletes at their prime(below 35 yrs old), they can afford less family committment and choose to hv less social activities.

For the avg person who has normal intellectual capabilities, family committments, young children, aged parents, etc, it is simply not possible to dedicate the kind of "500 pages a day" effort. But I do believe reading 500 pages will make a significant difference in investing outcome.

Yes, investing is not easy - I think there is too much hype on passive income. Most young investors aspiring to be the next investment guru may be in for a rude shock. Personally, for me, I wld still tell my younger self (esp in a developed country environment with many MNCs) that working full time is much better financially than full time investing.

[karlmarx]

Personally, for me, I wld still tell my younger self (esp in a developed country environment with many MNCs) that working full time is much better financially than full time investing.

Indeed, working hard at your career is probably more financially rewarding than working hard in your side gig (investing). Unless, of course, you have the energy and talent for both. In the worst case, one's boat does not land on either shore.

That said, I do agree with opmi that reading is a form of data collection. The only way to know how things will likely turn out, is to know how things work. And the only way to know how things work, is to talk to, or read the writings of, learned people of said things. Of course, you have to add your customary salt to these things. But having something to work on is better than nothing at all, if this is the game you want to play.

Yet, as you have mentioned, the task is not as simple as mindless reading of things like entertainment news. A poor ability to analyse the 'data collected' will render the time spent reading to be less productive.

Whoever said that investing is easy, or that a retail investor is likely to do better than a professional, cannot be further from the truth. In the case where the average retail investor does exceptionally well -- perhaps even better than the professional -- could it not be largely due to a rising market, or luck?