Albert Einstein may or may not have remarked about compound interest being the eighth wonder of the world but there is one investor who has used it to lollapalooza effect. His name: Warren Edward Buffett. Like most things that he talks about, compound interest is easy to understand but hard to execute where it is most needed — to multiply one’s net worth. Financial stupidity like self-pity is self-compounding and hence while investing in a stock one needs to get it right off the bat. The hallmark of Buffett’s investment style is that it has predictability as its centerpiece. It divides the world between ‘knowables’ and ‘unknowables’, and he focuses only on the ‘knowables’. Gordon Gekko’s line, “I don’t throw darts at a board. I bet on sure things” does come to mind except that Gekko was alluding to being in the know about what others are doing and Buffett is about knowing what he is doing.
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