Legendary investor Warren Buffett is widely considered one of the greatest investors of all time. It turns out Berkshire’s investing approach can be learned and repeated, evidenced by the mind-blowing returns one of his portfolio managers has generated.
According to a Business Insider report, citing a Washington Post interview from late 2021, Ted Weschler, an investment manager at Berkshire Hathaway Inc (NYSE: BRK-A) (NYSE: BRK-B), grew his retirement account from $70,000 to $264 million in less than 30 years with a simple approach.
What To Know: The massive fortune was first uncovered in June 2021 when ProPublica got ahold of Weschler’s tax returns. The Berkshire Hathaway portfolio manager then shared some details about how he managed to amass the wealth with reporter Allan Sloan.
“In a perfect world, nobody would know about this account,” Weschler reportedly told Sloan in an email.
“But now that the number is out there, I’m hopeful that some good can come of it by serving as a motivation for new workforce entrants to start saving and investing early.”
Weschler definitely got an early start, and anyone hoping to replicate the feat needs to do the same.
The report indicates that Weschler started an IRA in 1984 at the age of 22 and by the time he was 27, he had grown his account to $70,384 by maxing out his contributions and doubling down via employer match.
He quit his job as a financial analyst and began his journey in private equity. Despite getting off to a rocky start with investments in Continental Health and Intelogic, his new role ultimately led him to become a hedge fund manager by the turn of the century.
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Speaking with Sloan, the portfolio manager noted that all losses are simply “unmonetized lessons.”
Weschler reportedly generated compound annual returns of 22% for more than a decade before he joined Buffett’s Berkshire Hathaway in 2012.
He noted that he used to focus on companies that he believed were in much better standing than the market was pricing in. Weschler also said he spent a lot of his time studying companies and industries in order to find important pieces of information the market was missing.
For those who don’t have the time, he recommended focusing on index funds like the Vanguard S&P 500 ETF VOO. They can be very powerful tools for investors who can’t closely follow individual investments, he said.
But his main advice is to keep all of your money in equities and to tune out anyone who tells you to do something different.
“Start early, maximize the [employer] match, invest 100% in equities, and ignore all the other noise,” Weschler said.
The Berkshire manager told the Washington Post he made all of his money by investing in publicly available securities, suggesting anyone can do it with the right approach.
Buffett too was a beneficiary of an early start. The billionaire investor has been piling money into equities since he was 11. If you don’t have the early start advantage in front of you, one can always back the guys who are arguably the best to ever do it by buying shares of Berkshire Hathaway. The fund has historically outperformed the S&P 500.
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Originally published Feb. 7, 2022.