Buffett has long been accustomed to being mocked by crowds. In investing, aiming for exceptionally high returns often means having to withstand deep drawdowns.
Let’s look back at some of his best-known classic trades. After buying the Washington Post, his account once suffered a maximum drawdown of 40%, but the investment eventually returned 100 times his money. American Express was much the same: after he bought in, it fell as much as 50%, yet ultimately delivered a 35-fold gain. His investments in Coca-Cola and Wells Fargo also saw maximum drawdowns of 53% and 52%, respectively, after he bought in, but eventually returned 30 times and 9 times his investment. Even his investments in BYD and Apple experienced maximum drawdowns of 50% and 38% after he built his positions, yet ultimately yielded impressive returns of 38 times and 5 times, respectively.
A long lifespan, combined with ample capital, is the key advantage that has enabled Buffett to weather market cycles. If all you care about when investing is finding stocks that barely decline after you buy them, then at this point you’ll probably have to follow Pei Nai’s lead.
Let’s look back at some of his best-known classic trades. After buying the Washington Post, his account once suffered a maximum drawdown of 40%, but the investment eventually returned 100 times his money. American Express was much the same: after he bought in, it fell as much as 50%, yet ultimately delivered a 35-fold gain. His investments in Coca-Cola and Wells Fargo also saw maximum drawdowns of 53% and 52%, respectively, after he bought in, but eventually returned 30 times and 9 times his investment. Even his investments in BYD and Apple experienced maximum drawdowns of 50% and 38% after he built his positions, yet ultimately yielded impressive returns of 38 times and 5 times, respectively.
A long lifespan, combined with ample capital, is the key advantage that has enabled Buffett to weather market cycles. If all you care about when investing is finding stocks that barely decline after you buy them, then at this point you’ll probably have to follow Pei Nai’s lead.
