Warren Buffett explains how you could've turned $114 into $400,000 with a simple long-term investmen

T

trader99

Amazing power of long-term investing in U.S. index. But the example Buffett gave was probably the best run of any equity markets in the world. This figure is over 76 years.

You think the next 76 years will have the same amazing run in equity markets?

If so then just buy index regularly and forget about it. If not then trading makes total sense.

https://finance.yahoo.com/news/warren-buffett-says-couldve-turned-114-400000-230140222.html

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First, take yourself back, way back to America’s entry into World War II. Franklin Roosevelt was president and Buffett was a young boy. And as you may know young Buffett, unlike most kids his age interested in games or sports, was basically consumed by the stock market. And at that dark moment in US history, Buffett was ready to take action.

“Let me give you a figure that’ll blow your mind I think. I bought my first stock when I was 11 years old. It was the first quarter of 1942, shortly after Pearl Harbor,” Buffett recalls. “I spent $114.75, [for] shares [of a stock.] $114.75. If I put that $114 into the S&P 500 at that time and reinvested the dividends, think of a figure as to what it…would be worth today,” he asked me?

So, what do think?

$10,000?

$75,000?

I’ll give you some help. That’s way low.

Let’s pick it up with Buffett again: “The answer is about $400,000. So if I as a little kid had taken that 114 bucks I’d saved— shoveling snow (LAUGH) or whatever I’d done, [I’d have] $400,000 today. [In] one person’s lifetime. That’s America. I mean, that isn’t me. You know, it’s the huge tailwind the American economy gives to any equity investor.”
 
$114 in 1942 was a lot of money ($1,756 in purchasing power today).
No 11 year old kid got that from "shoveling snow or whatever".

Just more lib media love for one of their own
 
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Clubber Lang said:
$114 in 1942 was a lot of money ($1,756 in purchasing power today).
No 11 year old kid got that from "shoveling snow or whatever".

Just more lib media love for one of their own
More...
Shoveling snow and cutting the grass for 3 neighbors at $15-20 a pop would still do it.
 
That's 11.33% average annual return including dividends... and with the Fed pumping and debasing the $USD by 99% or so, not including taxes, of course.
 
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DTB2 said:
Shoveling snow and cutting the grass for 3 neighbors at $15-20 a pop would still do it.
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Minimum wage was 30 cents an hour in the US in 1942.
Based on that he worked around 380 hours to make $114
However an 11 year old is going to earn less than the minimum wage, so he must of done even more hours than that.

A quick google of what life was like in 1942:

"Nostalgic journeys are sure to highlight the ridiculously low cost of living “back when.” Indeed, the typical American house in 1942 cost $3,775, a new car $920, and a movie ticket 30 cents.

A postage stamp set you back 3 cents, your loaf of bread ran you 9 cents, and — if your kid was smart enough — you could get him into Harvard University for $420 in tuition per year. (I say “him,” because the school wouldn’t admit girls as undergraduates until 1973.)

Of course, the average American’s yearly income in 1942 was $1,885, so $420 was a big chunk of change in those days."
 
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southall said:
Minimum wage was 30 cents an hour in the US in 1942.
Based on that he worked around 380 hours to make $114
However an 11 year old is going to earn less than the the minimum wage, so he must of done even more hours than that.
More...

The point of his message is to show the power of compounding and time. And no matter how you slice it, 400k today is a lot more that 117 was then (even if 117 was a decent amount).

To put it another way, a parent who had a child in 1944 could have secured that child’s retirement on a modest investment.

If you have read a biography on warren buffet, he was an entrepreneur from a very young age. If I recall correctly, he started a gumball company in his tweens (or younger) and was earning more than the average American family by the time he was 18.
 
newwurldmn said:
To put it another way, a parent who had a child in 1944 could have secured that child’s retirement on a modest investment.
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Yeah but the kids when they turn 16 want a car, then university fees, and/or an expensive wedding, and then a house or deposit on a house. So it all cashed in after 25 years. No one waits 75 years.
 
southall said:
Yeah but the kids when they turn 18 want a car, university fees, and/or an expensive wedding, and then a house or deposit on a house. So it all cashed in after 25 years. No one waits 75 years.
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Lefties to blame. They've recruited the young with the notion, "you deserve, are entiteled and can have everything... just vote for us". (Of course they don't get everything.. at least not until Bernie Sanders becomes POTUS... but they get waaayyy more than they deserve and have earned for themselves.)
 
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