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

[DTB2]

LOL in 1942. Try $2 and $3 a pop. Maybe.

I have an uncle (still above ground/age 92) who, true story, back then in the early 40's as a mechanic bought used cars from some of his customers in that price range.

But even if the average adult or kid earned $115 they needed that a lot more than a piece of paper. No matter how much it eventually appreciated. Buffet's tune would be a lot different if he was born say 14 years earlier - that would of made him 11 years in 1928. Timing .... and a little bit of luck is everything.

Read much?

My response was to this:
$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".

It wasn't to imply that people paid that in 1942.

Idiot.

 

[SunTrader]

Read much?

My response was to this:
$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".

It wasn't to imply that people paid that in 1942.

Idiot.

Read your post again.

You threw out numbers as if to imply if anything (even if you don't think so) that is was plausible.

 

[southall]

Looking at that chart, volatility of annual returns prior to 1940 was pretty insane.

I doubt many people in 1942 would want to buy and hold long term based on the historic data available at that time.

Its really only post 1980 that buy and hold looks relatively sensible on a yearly basis.

 

[trader99]

Looking at that chart, volatility of annual returns prior to 1940 was pretty insane.

I doubt many people in 1942 would want to buy and hold long term based on the historic data available at that time.

Its really only post 1980 that buy and hold looks relatively sensible on a yearly basis.

Since the 1987, the Fed has been "managing" the market more. We no longer have a free market since 2008 crash. This smoothed volatility is a controlled illusion and unnatural. I wonder how long can Central Banks around the world keep this up.

So the volatility you see prior to the 80s and definitely prior to 2009 are actually how markets work! Not this super smooth curve. Markets are driven by fear and greed.

As daytraders, we don't really care. Just in and out all day long. Just thinking outloud about the macro picture here.

 

[SunTrader]

Except this topic is about (Buffet's) long term returns, NOT daytrading.

 

[murray t turtle]

How he could have invested in the S&P500 back in the 40s with no fees?

%%
That is one reason its tough for some to beat the S&P 500/SPY; commissions/ fees/slippage/ are not included. Some annual reports may disclose that .....LOL. Good benchmark anyway; much preferred to DOW/DIA

 

[Atomic_Sheep]

I downloaded yearly S&P return data and I must be missing something because $114 doesn't turn into $400k, I get $26,800 which seems more reasonable. How did he get $400k???

 

[SunTrader]

I downloaded yearly S&P return data and I must be missing something because $114 doesn't turn into $400k, I get $26,800 which seems more reasonable. How did he get $400k???

Did you account for reinvestment of dividends? Still $400k seems a bit out there.

 

[southall]

I downloaded yearly S&P return data and I must be missing something because $114 doesn't turn into $400k, I get $26,800 which seems more reasonable. How did he get $400k???

The difference between 7.5% a year and 11.5% a year (if you reinvest dividends) is huge after 76 years.
7.5% for 76 years returns 28K, 11.5% returns 400K