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Brett Arends’s ROI: How ‘washed up…old man’ Warren Buffett is getting the last laugh

Poor old Warren Buffett.

Poor, old, “washed up” Warren Buffett!

It’s almost two years since the Berkshire Hathaway chairman, then 89, was publicly mocked by 40-something self-proclaimed stock market “captain” and “winner,” Barstool Sports founder David Portnoy. 

“He’s old, he’s washed up,” Portnoy said about Buffett. “He’s an old man, his time passed him by.”

“I’m better that he is. It’s no debate. I killed him. He’s dead. He’s dead,” Portnoy said.

“I’m just printing money,” Portnoy said. “Why take profits when every airline goes up 20% everyday. Losers take profits. Winners push the chips to the middle. I should be up a billion dollars.”

He added: “There’s nobody who can argue that Warren Buffett is better at the stock market than I am right now. I’m better than he is. That’s a fact.”

Booyah!

I was thinking of Portnoy’s comment recently, after stock in Buffett’s conglomerate Berkshire Hathaway zoomed past $500,000 a share for the first time in history.

In the 21 months since Portnoy’s tweet, Berkshire Hathaway
BRK.A,
-0.71%

stock has rocketed by 75%, beating the S&P 500
SPX,
-0.72%

by a clear 30 percentage points (all this year) and the riskier small cap Russell 2000
RUT,
-0.78%

by 40 points. We attempted to contact Portnoy and his company for comment but were not able to reach him.

Maybe more to the point, simple math shows that Buffett, now 91, has personally made more money since Portnoy’s tweet than at any other time in his career. His net worth is up a staggering $56 billion since then, has broken $100 billion for the first time, and is at the time of this writing up to $126 billion.

Not bad for someone who just announced another megadeal, one of his biggest ever.

Celebrity Net Worth estimates Portnoy’s fortune at $80 million.

Poor old Warren! Wow, did his time pass him by!

There’s a simple lesson for all investors in this, and it’s about the value of compound interest once we are in the third stage of life.

One of the reasons Buffett has been making by far the most money of his career in the past couple of years is because by this stage his accumulated stake is so large. So a 35% gain today will make him far more money in actual dollar terms than a 50% or even 100% gain would have done in the past. Such are the benefits of saving early and often.

Meanwhile, it has been an almost infallible rule during my career as a financial journalist that you should just go out and buy stock in Berkshire Hathaway whenever people start to say that Buffett has passed his prime.

I remember hearing much the same in early 2000, during the last dot-com bubble, when “old economy” Berkshire stock had nearly halved to around $40,000.

And they were saying much the same in the fall of 2008, during the global financial crisis, when Buffett urged people to buy stocks and various people said he’d lost it.

(Oh, and one of the many reasons why you should never, ever, ever take my advice is that I am so stupid I was willing to sell my Berkshire Hathaway stock — along with my Amazon
AMZN,
+0.14%

stock and Diageo
DEO,
-0.89%

stock — in 2006 to go work for Jim Cramer at TheStreet.com. Idiot, indeed. But I loved the job.)

Now at $529,000, Berkshire Hathaway stock looks neither especially cheap nor expensive by its own historical standards. The conglomerate, which includes GEICO insurance, See’s Candies and multiple other businesses, currently trades at 1.5 times net asset or “book” value, which is pretty much average for the past 2 decades.

If any other genius traders in their 40s (or younger) think Buffett is washed up at 91, maybe we shouldn’t tell them about his vice chairman and friend Charlie Munger, still going strong at…98.

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