{"id":34373,"date":"2026-01-27T23:56:00","date_gmt":"2026-01-27T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=34373"},"modified":"2025-12-01T17:05:39","modified_gmt":"2025-12-01T09:05:39","slug":"factors-buffett-success","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/","title":{"rendered":"Seven key factors contribute Buffett success"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Sources_of_this_article-Buffett_success\" >Sources of this article-Buffett success<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Open_Remarks\" >Open Remarks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Mental_aptitude\" >Mental aptitude<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Start_very_early\" >Start very early<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Strongly_interested_in\" >Strongly interested in<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Best_learning_machines\" >Best learning machines<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Concentrate_decisions_and_process_in_one_person\" >Concentrate decisions and process in one person<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Reinforcement\" >Reinforcement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Trust\" >Trust<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/27\/factors-buffett-success\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sources_of_this_article-Buffett_success\"><\/span>Sources of this article-Buffett success<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>This article describes several key factors to Buffett success: Charlie Munger made a very important speech at the beginning of the <a href=\"https:\/\/worldlypartners.com\/wp-content\/uploads\/2024\/01\/2007-wesco-annual-meeting-notes-of-charlie-mungers-remarks-whitney-tilson.pdf\" target=\"_blank\" rel=\"noopener\">2007 Weisco shareholders&#8217; meeting and the Q&amp;A discussion with shareholders<\/a>. As the person who knows Buffett best and his lifelong business partner, there is no doubt that Munger understands Buffett better than anyone else. I personally think that Munger\u2019s analysis is very in-depth and well worth the investment of reading it, and carefully savoring the implications of Munger\u2019s original remarks.<\/p>\n\n\n\n<p><strong>Note<\/strong>: <em>The part of this article in italic text comes from Munger<\/em>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Open_Remarks\"><\/span>Open Remarks<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>I want to do something I haven\u2019t done before. I feel obligated because so many of you came from such great distances, so I\u2019ll talk about a question I\u2019ve chosen, one that ought to interest you: Why were Warren Buffett and his creation, Berkshire Hathaway, so unusually successful? If that success in investment isn\u2019t the best in the history of the investment world, it\u2019s certainly in the top five. It\u2019s a lollapalooza.<\/em><\/p>\n\n\n\n<p><em>Why did one man, starting with nothing, no credit rating, end up with this ridiculous collection of assets: $120 billion of cash and marketable securities, all from $10 million when Warren took over, with about the same number of shares outstanding. It\u2019s a very extreme result.<\/em><\/p>\n\n\n\n<p><em>A confluence of factors in the same direction caused Warren\u2019s success. It\u2019s very unlikely that a lollapalooza effect can come from anything else. So let\u2019s look at the factors that contributed to this result:<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Mental_aptitude\"><\/span>Mental aptitude<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>The first factor is the mental aptitude. Warren is seriously smart. On the other hand, he can\u2019t beat all comers in chess blindfolded. He\u2019s out-achieved his mental aptitude.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Start_very_early\"><\/span>Start very early<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>Then there\u2019s the good effect caused by his doing this since he was 10 years old. <\/em><\/p>\n\n\n\n<p><strong>Note 1<\/strong>: I mentioned in my book &#8220;<a href=\"https:\/\/www.books.com.tw\/products\/0010889106\" target=\"_blank\" rel=\"noopener\">The Rules of Super Growth Stocks Investing<\/a>&#8220;: Jim Simons, the greatest master of quantitative investment in history. Simons&#8217; annualized return on his career investments is more than twice that of Buffett (Buffett&#8217;s annualized return over his entire 59-year investment career from 1965 to 2023 was 19.8%). But why is Buffett much richer than Simons? The reason is that Buffett&#8217;s investment career is far longer than Simons, and much longer.<\/p>\n\n\n\n<p><strong>Note 2<\/strong>: During these 36 years, even after deducting the high expenses, Jim Simons achieved an astonishing annualized return of nearly 40%. This is the best performance of any investment guru known today. For this Jim Simons, please refer to my previous posts: &#8220;&#8221;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/01\/14\/irr-of-investment-masters\/\">The career annualized return on investment of top investment masters: Buffett, Simons, Lynch, Dalio, Keynes, Munger, Soros, Miller, Karaman<\/a>&#8220;.<\/p>\n\n\n\n<p><strong>Note 3<\/strong>: Buffett&#8217;s career annualized investment return rate is close to 20% by the end of 2023, but this is because Buffett started investing when he was less than 20 years old, Jim Simons started investing at the age of 43, which is why Buffett&#8217;s current assets of US$133.7 billion far exceed Jim. Simmons $31.8 billion.<\/p>\n\n\n\n<p><strong>Note 4<\/strong>: About Jim. Simons, please refer to my posts: &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/11\/jim-simons-pass-away\/#google_vignette\" target=\"_blank\" rel=\"noreferrer noopener\">Jim Simons, the lord of quantitative investing<\/a>&#8221; and &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/11\/book-by-jim-simons\/\" target=\"_blank\" rel=\"noreferrer noopener\">The quant&#8217;s must-read book for Jim Simons &#8220;The Man Who Solved the Market&#8221;<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Strongly_interested_in\"><\/span>Strongly interested in<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>It\u2019s very hard to succeed until you take the first step in what you\u2019re strongly interested in. There\u2019s no substitute for strong interest and he got a very early start.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Best_learning_machines\"><\/span>Best learning machines<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>This is really crucial: Warren is one of the best learning machines on this earth. The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you. <\/em><\/p>\n\n\n\n<p><em>Warren was lucky that he could still learn effectively and build his skills, even after he reached retirement age. Warren\u2019s investing skills have markedly increased since he turned 65. Having watched the whole process with Warren, I can report that if he had stopped with what he knew at earlier points, the record would be a pale shadow of what it is.<\/em><br><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concentrate_decisions_and_process_in_one_person\"><\/span>Concentrate decisions and process in one person<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>The work has been heavily concentrated in one mind. Sure, others have had input, but Berkshire enormously reflects the contributions of one great single mind. It\u2019s hard to think of great success by committees in the investment world \u2013 or in physics. Many people miss this. Look at John Wooden, the greatest basketball coach ever: his record improved later in life when he got a great idea: be less egalitarian. Of 12 players on his team, the bottom five didn\u2019t play \u2013 they were just sparring partners. Instead, he concentrated experience in his top players. That happened at Berkshire \u2013 there was concentrated experience and playing time. <\/em><\/p>\n\n\n\n<p><em>This is not how we normally live: in a democracy, everyone takes turns. But if you really want a lot of wisdom, it\u2019s better to concentrate decisions and process in one person.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reinforcement\"><\/span>Reinforcement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>All human beings work better when they get what psychologists call reinforcement. If you get constant rewards, even if you\u2019re Warren Buffett, you\u2019ll respond \u2013 and few things give more rewards than being a great investor. The money comes in, people look up to you and maybe some even envy you. And if you buy a whole lot of operating businesses and they win a lot of admiration, there\u2019s a lot of reinforcement. <\/em><\/p>\n\n\n\n<p><em>Learn from this and find out how to prosper by reinforcing the people who are close to you. If you want to be happy in marriage, try to improve yourself as a spouse, not change your spouse. Warren has known this from an early age and it\u2019s helped him a lot.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Trust\"><\/span>Trust<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>Also, an enormous pleasure in life is to be rightly trusted. One of my kids was a<br>computer nerd and his school gave him access to the entire school computer system. He was exultant by the extreme trust. If your friends are asking you to raise their children if they die, you\u2019re doing something right. It\u2019s wonderful to be trusted. Some think if we just had more compliance checks and process, virtue would be maximized. <\/em><\/p>\n\n\n\n<p><em>At Berkshire, we have subnormal process. We try to operate in a web of seamless trust, deserved trust, and try to be careful whom we let in. They act like this at the Mayo Clinic. Imagine if they didn\u2019t. Most patients would die.<\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"149\" height=\"90\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2025\/02\/Buffett-Custom.jpg\" alt=\"Buffett success\" class=\"wp-image-34393\"\/><figcaption class=\"wp-element-caption\">credit: Ideogram<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;Seven key factors contribute Buffett success&#8221;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/06\/16\/warren-buffett-investor\/\"><\/a><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/06\/16\/warren-buffett-investor\/\">Primer&#8217;s book to know Buffett-&#8220;Warren Buffett: Investor and Entrepreneur&#8221;<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/07\/buffett-deserves-study\/\">Why Buffett deserves further study<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/27\/buffett-portfolio\/\" target=\"_blank\" rel=\"noreferrer noopener\">The commonalities of Buffett portfolio \u2013 cheap, fixed income, repurchase<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/07\/buffett-investment-idea\/\">What helps Buffett to get his investment idea?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/27\/imitating-fastest-effective\/\">Imitating great investors is the fastest and most effective way<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/24\/investment-masters\/\">How to research successful investment masters?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/01\/14\/irr-of-investment-masters\/\">The career annualized return on investment of top investment masters: Buffett, Simons, Lynch, Dalio, Keynes, Munger, Soros, Miller, Karaman<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/27\/warren-buffetts-ground-rules\/\">The Chronicle of Buffett Partners &#8220;Warren Buffett&#8217;s Ground Rules<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/03\/20\/long-term-investment\/\">How Buffett Structures His Long-Term Investment Portfolio<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/08\/17\/possibility-of-long-term\/\">Possibility of long-term holdings, Deep dive on Buffett&#8217;s case<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/27\/survivorship-bias\/\" target=\"_blank\" rel=\"noreferrer noopener\">People believe successful investors are survivorship bias cannot succeed<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/11\/jim-simons-pass-away\/#google_vignette\" target=\"_blank\" rel=\"noreferrer noopener\">Jim Simons, the lord of quantitative investing<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/11\/book-by-jim-simons\/\" target=\"_blank\" rel=\"noreferrer noopener\">The quant&#8217;s must-read book for Jim Simons &#8220;The Man Who Solved the Market&#8221;<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>This article describes 7 key factors to Buffett success: Charlie Munger made a very important speech at the beginning of the 2007 Weisco shareholders&#8217; meeting and the Q&#038;A discussion with shareholders. <\/p>\n","protected":false},"author":1,"featured_media":34393,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,15,72],"tags":[],"class_list":["post-34373","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buffett","category-charlie-munger","category-jim-simons"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/34373","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=34373"}],"version-history":[{"count":28,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/34373\/revisions"}],"predecessor-version":[{"id":37052,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/34373\/revisions\/37052"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/34393"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=34373"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=34373"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=34373"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}