By ProfessionalTradingSystems.com
By far Warren Buffet is the most popular investor in financial markets nowadays. Frequently he tops Fortune`s list for the wealthiest people on Earth. He has built an amazing track record of successful years by doing what he loves doing the most – capital allocation. What is the secret behind his success?
A valid method of investing – you have to have a profitable method when you invest your money in stock market, for sure . His method for searching undervalued stocks is well known to all of us, who are interested in investing and trading. But is that the real trait of his success? NO! Because this method is very simple and available to the public. According to him if you use Greek letters for your investing, you are on the wrong path. Warren doesn’t use any computer or complicated tools for this research. That`s why I can say that his method of investing is not the main root of his success.
For me real key to the golden door is his Emotional stability. On our field of investing and trading you don’t need super intelligence and great IQ. You need persistence and emotional stability to follow your investment strategy. Almost always you have to do just the opposite of the what the crowd is doing.
This feature of his character has led him year after year to follow his strategy and to achieve extraordinary results. Below you can see his performance since 1965 as described in “The Warren Buffet Way ” by Robert Hagstrom:
| Year | % Gain/Loss | Year | % Gain/Loss | Year | % Gain/Loss | ||
| 1965 | 23.8 | 1979 | 35.7 | 1993 | 14.3 | ||
| 1966 | 20.3 | 1980 | 19.3 | 1994 | 13.9 | ||
| 1967 | 11 | 1981 | 31.4 | 1995 | 43.1 | ||
| 1968 | 19 | 1982 | 40 | 1996 | 31.8 | ||
| 1969 | 16.2 | 1983 | 32.3 | 1997 | 34.1 | ||
| 1970 | 12 | 1984 | 13.6 | 1998 | 48.3 | ||
| 1971 | 16.4 | 1985 | 48.2 | 1999 | 0.5 | ||
| 1972 | 21.7 | 1986 | 26.1 | 2000 | 6.5 | ||
| 1973 | 4.7 | 1987 | 19.5 | 2001 | -6.2 | ||
| 1974 | 5.5 | 1988 | 20.1 | 2002 | 10 | ||
| 1975 | 21.9 | 1989 | 44.4 | 2003 | 21 | ||
| 1976 | 59.3 | 1990 | 7.4 | ||||
| 1977 | 31.9 | 1991 | 39.6 | ||||
| 1978 | 24 | 1992 | 20.3 |
The average gain during this period is 22.2% annually. To be honest it is not a big yearly performance, we know many traders who have achieved a lot more than 22%. BUT Warren has been doing it since 1965!!! More than 50 years – as we don’t include his first years on investing running Buffet Partnership! There are many, many traders and investors who has done an amazing job for a short period of time but there are none who have succeeded for that long time.
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So the key to wealth is doing a good job for a long time.
Article by Professional Trading Systems – Forex Mechanical and Automated Systems