Random Musing: mathematical models

By Edward Harrison On Aug 19, 2008

Warren Buffett has done pretty well for himself, amassing a net worth north of $50 billion. Yet, for all his detailed analysis and combing through financial reports, he has never said he models things out to the nth degree.

In fact, Buffett says quite the opposite. He and his mentor Ben Graham believed in buying stocks that provided enough of a buffer of value that one could be confident it would rise in value. Rather than using mathematical models to make investing into the science it is not, Buffett believes in buying things that are demonstrably more valuable than prevailing prices would imply.

Only with that kind of significant buffer did Buffett amass his fortune — no models necessary.

Edward Harrison 7783 posts 575 comments

Edward Harrison is a senior Editor at Bloomberg. He is also the founder of Credit Writedowns newsletter, a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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