A letter a day.
Letter 9#1964
Key Learnings:
- In this letter Buffett explains the “Joys of compounding” through the famous story of Leonardo da Vinci. If you havnt read it yet, I will put it down here
“Francis I of France paid 4,000 ecus in 1540 for Leonardo da Vinci’s Mona Lisa. On the off chance that a few of you have not kept track of the fluctuations of the ecu 4,000 converted out to about $20,000.
If Francis had kept his feet on the ground and he (and his trustees) had been able to find a 6% after-tax investment, the estate now would be worth something over $1,000,000,000,000,000.00. That’s $1 quadrillion or over 3,000 times the present national debt, all from 6%.”
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Variation of merely few percentage points over the time has enormous impact on compounding.
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In this letter he has again described the three categories of investment i.e workout, general and control in detail (which is already discussed in 1961) . The division of the portfolio amongst the three categories is largely determined
by the accident or availability.
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