Why the Supreme Version of Warren Buffett Will Be Performed by a Woman

How to redesign your future portfolio

On the Mississippi River banks, Tom Sawyer played the most incredible adventures. Adventures that have fueled our already rich childhood.

This iconic character challenged the universe with unexpected and dangerous situations. He fed our sense of the impossible and ignited us to believe in the impossible.

I read two biographies a year. And I’m still amazed by the adventures of some of the most successful people in the history of mankind.

Sometimes I get myself laughing out loud by the dangerous stuff people did in the crazy years of the 1940s and 50s.

An almost 1,000 book biography that I recently read made me return to the Tom Sawyer era.

The book described a kid just like Mark Twain’s creation. And the adventures had everyday madness and danger.

The big book described a skinny kid who spends thousands of hours in libraries. He read everything that appeared in front of him.

The kid started saving all the pennies he got. He usually sold peanuts and chewing gum at baseball games over the weekend.

At the age of 6, he sold badges and cans of the collectible coca-colas door to door.

From an early age, this kid memorized entire books. His memory was inversely proportional to his ability to socialize. He had few friends, but when they were together, something awkward was about to happen. A real nerd of the 50s.

Business and numbers went through his eyes like peanut butter melting inside his mouth.

At 15, he already earned more than his teachers. His earns came from selling newspapers in his neighborhood’s apartment complexes.

At 17, a business idea made him go running to tell his friend Don. He said:

“I bought this old flipper machine for $25, and we can make a partnership. Your part of the deal is to fix it. Let’s tell Frank Erico, the barber, that ‘we represent Wilson’s Coin-Operated Machine Company and we have a proposal from Mr. Wilson. There is no risk to you. We will put a machine in the back, Mr. Erico, and your customers can play while they wait. Then we split the money.’ “

Mr. Erico accepted. A week passed and the 17-year-old kid emptied the machine. He separated the coins into two piles, and in his pile were 25 dollars.

Shortly after that, there were seven or eight “Mr. Wilson” machines installed in barbershops across the city of Omaha.

The story spread quickly and the kid and Don became known throughout the school. No wonder. At the end of that school year, the kid already had the astonishing amount of five thousand dollars in savings.

A small fortune that increased, like a snowball, due to brilliant ideas like that of the flippers. But also because of the effort of more than 500,000 newspapers thrown on Omaha’s icy mornings.

The kid was a product of a good education, an exceptional memory, and a phenomenal decade in a typical American city. A sophisticated version of Tom Sawyer has emerged. And one of the most successful men in modern American history was born.

This skinny entrepreneur who took refuge in libraries and had crazy ideas for winning penny after penny is now famous. His name is Warren Buffett.

Young Warren had no way with girls but collected all the coins that crossed in front of his eyes from an early age.

Soon he realized the magic of compound interest. He knew how to hoard and wait.

And the magic worked.

A Story About the Compounding Jedi

Albert Einstein said the compound interests were the eighth wonder of the world. And said: “those who understand them wins it, and those who don’t understand pay it.“

Buffett taught young investors early on the power of compound interest. It cannot be compared to any other factor in producing wealth through investment.

For Warren, real investment is a long-term multiplication program. It’s a process of continually reinvesting earnings so that each subsequent addition starts to earn a return in itself.

The compound interest regime derives its power from its parabolic nature; the longer it lasts, the more impact it has.- Jeremy Miller in Warren Buffett’s Ground Rules

Omaha’s Tom Sawyer often does the following exercise:

An investment of $100,000 with a return of 10% per year has a 7% higher return if profits are always reinvested and not reaped after 5 years.

After 10 years, the account that reinvests its profits will produce 30% more than one that does not reinvent. After 15 years, profit soars to 70%.

The compound interest regime is exponential. It builds dynamics as time goes by. After 20 years, the advantage expands to 125%.

This is the magic of compound interest.

There was no other businessman at the school. He earned $175 a month, more than his teachers, just for distributing newspapers for a few hours a day. In 1946, an adult man felt well paid by earning $3,000 a year working full time.- Warren Buffett in The Snowball. Warren Buffett and the Business of Life

The New Wonderwoman of Investment As Arrived

Tesla was an attraction for short-sellers from an early age. Even today, they don’t believe in Elon Musk’s company success. This phenomenon is happening in almost every disruptive innovative companies. Against unbelievers, the industries seek to fight for their prime time.

Cathy Wood is the founder of an investment company. Early on, she believed that 5 technological platforms would revolutionize entire industries. Those platforms are Artificial Intelligence, Robotics, DNA sequencing, Battery Storage, and Cryptocurrencies.

Traditional international firms are having trouble understanding the magnitude of the innovations that are taking place today. Investment firms that are not set up correctly to analyze, research, and invest in disruptive innovation are going to be depriving their investors of one of the biggest opportunities of our lifetime.- Cathy Wood, CEO of Ark Invest.

Since then, Cathy went from being a villain and misunderstood manager to a social media star and active investment management.

Not by chance, Elon Musk went from being the CEO of a negative results’ company to the fifth most valuable one in the S&P500.

Disruptive innovations generally have this strange effect. The general population doesn’t understand and somehow rejects all kinds of inventions. Especially those that call into question the status quo.

Tristan Claridge calls these people objectionists and explain:

Change in organizations can be difficult, even traumatic for employees, but change is required for improvement and ongoing success. In many workplaces, some people are objectionists — I suspect this is not a real word but used here to describe people who regularly take objection to change initiatives. Therefore they are objection-ist.

It’s difficult to predict the future, but you can always try to understand the past. And Cathy Wood and her team studied the early 1900s when 3 platforms did disrupt the entire world. The internal combustion engine, the telephone, and electricity.

The cities landscape changed because there was no need for any more horses, but cars instead.

Electricity brought the creation of appliances, radio, and lighting until long hours of the night.

Communications itself became faster and broader since the telephone appeared.

Yet, it’s hard trying to explain to people that in a few years from now, you can pick up your phone and call a self-driving car.

It’s also challenging to explain to people that everyone will have a personal geneticist. Someone that will prevent all potential diseases you may have during your lifetime. They will be able to analyze your genome and prevent future diseases.

Try to explain to people that shortly you will have an almost free monthly electricity bill. The battery storage technology will make it possible. Yet, your friends will look at you in strange ways.

And last, and most difficult of all, try to explain that money as we know it will disappear. Try to explain to people that your work will be paid in cryptocurrencies by crediting your personal account.

That‘s the moment your friend will finally say you’re crazy.

Warren vs Cathy

One thing Buffet and Wood have in common is the early adoption of a strong strategy.

Benjamin Graham taught Warren on value investing, buy-and-hold, and concentrated diversification.

Cathy also had a mentor. The American economist Arthur Laffer, who was recently honored with the Presidential Medal of Freedom. In President Trump’s words “one of the most influential economists in American history.”

Ben Stupples of Bloomberg writes that Wood founded ARK “after managing funds at AllianceBernstein, where the idea for active ETFs based on disruptive technology first occurred to her.”

Berkshire Hathaway is an American multinational conglomerate holding company with a tremendous story of success. Buffett’s holding has averaged an impressive annual growth in book value of 19.0% to its shareholders since 1965.

Cathy Wood is a recent case study. History doesn’t repeat itself. But she had the emotional intelligence to resist the haters and the bearish. They tried to discredit the entire Ark’s team's painstaking process.

Ark Invest’s results are in the beginning. But everything seems to make sense in how the company analyzes disruptive companies’ effects.

Ark is based on Wright’s Law. Which aims to provide a reliable framework for forecasting cost declines as a function of cumulative production. Specifically, it states that costs will fall by a constant percentage for every cumulative doubling of units produced.

This principle makes disruptive innovations as deflationary technologies. Meaning that price declines as technology evolves. One example is the sequence of the first all human genome. It took 13 years of computing power, and it cost 2.7 billion dollars. Today it takes $600 and a few hours of computing power. That’s a deflationary event, a consequence of technology disruption.

Final Thoughts

We’ll never know what the future holds.

What we know, for sure, is the outstanding success of Warren Buffett. His story of life is inspirational. Reading the almost 1,000 pages of The Snowball. Warren Buffett and the Business of Life was the most inspiring experience as a young investor.

So, experiencing the greatest technological disruption in human history is precious. Especially for an innovation lover like myself.

I hope Cathy Wood is right.

I’d love to read her 1,000 pages biography a few decades from now. And learn all the details about the best female investment manager in human history. You know why?

That would mean that she was right all the time.

We’d had disruptive technologies saving the planet earth from environmental disaster.

We would have eliminated diseases like cancer, childhood blindness, or diabetes. Some specific technologies would help. Like DNA sequencing technology, gene editing, CRISPR, therapeutics, and molecular diagnostics.

We’re not here to invest in what has already worked. Investing is about the future. — Cathy Wood, CEO of Ark Invest

I see investments most romantically.

I’m also a compulsive optimist. And the investments I make are the result of a thorough analysis of companies and their leaders. But also what I believe to be the future of humanity.

It’s a kind of formula mixing reason and emotion.

Sometimes I will be wrong. Other times I will get it right.

The future will always be in the hands of technology artisans.

At least, that’s what my heart tells me.

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