That is the question this article attempts to explore: Stockman: ‘Warren Buffett Economy’ Will Meet Day of Reckoning
During the 27 years after Alan Greenspan became Federal Reserve chairman in August 1987, the balance sheet of the central bank exploded from $200 billion to $4.5 trillion. Call it 23 times. Let’s see what else happened over that 27-year span. Well, according to Forbes, Warren Buffett’s net worth was $2.1 billion back in 1987 and it is now $73 billion. Call that 35 times. During those same years, the value of non-financial corporate equities rose from $2.6 trillion to $36.6 trillion. That’s on the hefty side, too — about 14 times.
So, it appears that Mr. Buffett was one of the primary beneficiary of the FED induced bubble. Starting with Greenspan in 1987. And while he is still a great investor, doubling the return of the above mentioned bubble, it definitely helps when the entire financial system expands just about as much as one’s net worth.
Here is another thing most people don’t realize. Buffett’s timing throughout his life was almost perfect. He started his hedge fund in 1956, just 6 years into a 17 year bull cycle. Ending it right at the top in 1966. The same goes for the above.
In other words, if you wish to replicate Mr. Buffett’s success, you will need the following: Luck, smarts and perfect timings.
