Plenty of Room at the Top
Are life and investing an Olympic sport with one sole gold medalist?
I had the privilege of having deep conversations with some of the brightest minds of investing lately, both on my podcast over the last few months and more recently in Omaha at Buffett’s Berkshire Hathaway Annual Meeting. Those conversations inspired and resurfaced the idea that maybe we are looking at the world the wrong way and there is plenty of room at the top in life and investing. Let me explain.
I think healthy competition is helpful in life and investing; too much of it can stifle the results, impede collaboration, and deprive us of the joy of the pursuit. For me, it started in high school, but when I went to college, many of my professors really played up this feeling of competition. They’d say: “Look around you; there are only two spots and thousands of students just like you.” In graduate school, the pressure only heated up. Only a handful of spots were always available for the most desirable scholarships, exchange programs, and internships. The next stop was a lucrative job or nothing – allegedly.
It is easy to start to see all pursuits as an Olympic sport with one gold medalist and those right behind them, only a fraction of a second slower, yet going home with nothing. In an interview with William Green, Tom Gayner, the legendary investor and the CEO of Markel Corporation, eluded to that idea. This conversation reminded me that not all life and investing is an Olympic sport; most of it is not.
If I told you the world’s 100th-best runner is still really fast, it doesn’t make an impression. But if I said the world’s 100th richest person is still very rich, it does sound different. Why is that?
I can’t say I don’t have a competitive streak. In graduate school, there was a very coveted internship with a major investment bank. Everyone I knew wanted a spot. I believe they offered a handful each year. My mind was set already: I wanted to be a stockpicker and value investor. I knew that I could possibly learn a lot at an investment bank, but I decided on a different career path. Peter Lynch, Phil Fisher, Ben Graham, and Warren Buffett had something to do with that. I was already buying stocks, making mistakes, and learning fast. Their lessons cannot be unheard, and I was under a spell that only grew stronger as the years passed.
Applying for this “top of the world” opportunity cost me some extra effort. Maybe I wanted to prove something to myself. I remember being called in for a series of interviews. One of them was very memorable and different than I expected to have. It was a heart-to-heart conversation with a junior banker, only a year or two older than me. He said that, given my credentials, I would likely get the position. A few days later, I found out he was right.
You probably guessed that I didn’t accept it. Another investment bank reached out soon after, but I had all the intention to start an internship with my soon-to-be boss, mentor, and, these days, business partner, Mr. François Sicart. That was over 18 years ago! I never looked back. The investment banking position offered better upfront pay, but the career I chose has been so much more rewarding and fulfilling. I respect those who took my spot and many others who worked in that profession; I just knew I wanted a different direction for myself. My mind was set.
Sitting at Buffett’s Annual Meeting, I was thinking about how Buffett clearly accumulated the majority of the wealth that Berkshire created under his leadership. He is the biggest shareholder, after all. Charlie Munger, his business partner, has a net worth that’s about 1/40th of Buffett’s. It doesn’t seem to frazzle him one bit. His $2.4 billion puts him in a very comfortable spot, financially speaking. Apparently, already 1/1000th of Charlie’s fortune is enough to feel rich, somewhere around $2.3 million, studies show.
If Buffett is a gold medalist in this pursuit, aren’t those with a minuscule fraction of his wealth still fine?
With my podcast guests, I spent a fair amount of time discussing their definition of success. They keep surprising me with how they look at such a simple yet powerful question. The answer can define our lives and careers. We discuss whether it’s a destination or a journey and whether we should maximize or optimize for some particular outputs we want. It’s a much more elaborate and complex answer than an image of a gold medalist standing high on a pedestal.
What I love about my interviews is how we can go on for an hour about everything investing and not mention benchmarks, indexes, and outperformance. Other times, we were supposed to talk about money, yet we talked about time as our most precious asset. How come some of us are time rich while others time poor? I’m reminded that time is not like money; we cannot save or borrow it. We can’t even steal it, for that matter. We all have the same 24 hours, 12 months, 52 weeks each year.
Sitting among Berkshire shareholders, celebrating the owners of this living case study in business success, I realized that we could all be winners in our own races. The closer you look, the more you’ll see that it’s not one single spot but many at the top. There are also many “tops” worth pursuing. You create your own idea of what it means to be at the proverbial top, after all. Financially speaking, it can be three months of monthly expenses saved, but it could also be a family fortune that can last 100 years or beyond.
Speaking of satisfaction derived from reaching the top, I think of Morgan Housel’s recent articles. He wrote: “The richest you’ll probably ever feel is when you get your first paycheck, and your bank account goes from $5 to, perhaps, $500. The contrast that it generates might be greater than going from $10 million to $20 million. Going from nothing to something is so much more powerful than going from a lot to super a lot. The contrast, not the amount, is what makes you happy.”
All this to say, there is plenty of room at the top; we all define our own “tops,” and paradoxically, it’s the first step on that journey, the first paycheck, that may give us more satisfaction than the actual “arrival” at the dreamt-up destination.
Buffett’s success made his business partner, Charlie Munger, rich, and many others. Obviously, Charlie contributed a lot more than shareholders watching Berkshire’s rise from afar.
You could be, but you don’t have to be the richest person to be at “the financial top.” It’s not about the last penny that sets you apart from someone right behind you. Some healthy competition keeps the world moving forward, more collaboration can help even more, and while we are it, why not enjoy the pursuit? It might bring us more satisfaction than the destination. Let’s not forget, after all; there is plenty of room at the top!
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