The Next Warren Buffett

The Next Warren Buffett

The Next Warren Buffett 2000 1333 Jonathan Poland

It’s funny to me that when someone is the best at what they do, other people want to find the next one to replace them. Just let them be. The next Michael Jordan was a curse for so many people and so is trying to be the next Warren Buffett.

For one, you can’t be the next WB. He grew up in Omaha during the great depression. I don’t even want to think about a 10-15 year stretch of economic trouble like that. The housing bubble caused 6 months of pain to the markets and 18 months of pain total. We’ve been on an upward streak ever since. Another big reason is there can’t be another Buffett is that regulations have changed. Getting 8 friends to pitch in $100k to manage or even the $1 million equivalent isn’t that feasible today in many states considering the red tape hedge funds have to go through. And, I think a lot of investors forget that Buffett GUARANTEED 4% to those original investors. So, they got the first 4 points and then anything above that was split.

Buffett is someone that I studied for many years, but what he really did well was turn Berkshire into a business not an just investment fund. Investment funds like Ray Dalio’s or David Tepper’s only have a finite amount of capital to allocate. Sure, they raise money with success but the fund itself isn’t generating nearly as much free cash flow as Berkshire subsidiaries do. Buffett has essentially created a private equity fund that funds his hedge fund activities.

The $116 billion cash pile Berkshire has wasn’t built on dividends, but rather direct ownership of companies that didn’t need all the cash they created. Sure, any business can find ways to use cash, but few are able to grow at above average rates while having extra to send out to Omaha.

Bottom Line: No one will be the next Warren Buffett


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