Funding strategy

What strategies made Warren Buffett so successful?



Very few people ever ask what Warren Buffett's funding strategy is - where does he get the money to invest? Does he borrow? Is it his own capital? Most focus on his investment strategy, but his funding strategy is just as, if not more, important.

With regards to his investment philosophy, see below.

  • Warren Buffet said regarding Intelligent Investor, “Chapters 8 and 20 have been the bedrock of my investing activities for more than 60 years...I suggest that all investors read those chapters and reread them every time the market has been especially strong or weak.”
  • The most important message of Intelligent Investor is a lesson about human behavior - that human behavior in overly exuberant and overly pessimistic markets seems to repeat itself over and over and is resistant to change. Being aware of your own natural, human tendency to behave in certain ways under different conditions is very powerful.
  • Buffett has said there were 4 books he cherished most in his library: 1. Intelligent Investor by Benjamin Graham 2. Wealth of Nations by Adam Smith 3. Security Analysis by Benjamin Graham and David Dodd 4. 1934 edition of Security Analysis with notes by co-author David Dodd in the margins
  • Buffett recently gave significant praise to founder of Oaktree Capital's Howard Marks' recent book The Most Important Thing. (I've read it given my background in distressed debt and value investing and can say it's my personal favorite along with Intelligent Investor.)
  • Buffett reads two investor letters immediately as they hit his inbox:
When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something, and that goes double for his book.
Jamie Dimon [of JPMorgan] is a fabulous banker, and probably writes the best annual report in America; I grab his report when it comes in and my friends do too.

.....(and he continues later on in the passage):

Books to read 2

I've learned that when we're consciously trying so hard to be different, it's actually our own emotions that are guiding us. The irony is that these natural emotions in various market conditions manifest themselves similarly in all of us - these common reactionary emotions are what make us human - so sure enough, we often all end up acting and reacting the same way.