If a trader makes 100–200% annual returns, then how is Warren Buffett the best investor in the world?
The three richest people who made their fortunes from investments are, from the Forbes 500 2017 list:Warren Buffett, $75.6 bn (#2)George Soros, $25.2 bn (#29)Carl Icahn, $16.6 bn (#55)Also listed is Prince Alwaleed Bin Talal Alsaud, $18,7 bn (#45). But he had a head start (Saudi royal family) while Buffett, Soros and Icahn all started with nothing. Which is why I left him out.Buffett is an investor while Soros is a trader. So based purely on results Soros must be counted as the world’s greatest trader.Soros had a couple of years where he made 100% profits. But his average in his heyday (before he started his Open Society foundation) was around 27%. More than Buffett’s 20%.So you might be wondering why Buffett is richer than Soros. A number of reasons:Buffett started much earlier, when he was 20 or so. Soros started about 15 years later (they were both born in 1930). 15 extra years of compounding your money makes an enormous difference. In his early years, by the way, Buffett was making up to 50% annual returns! Investing, not trading.Buffett continues to be 100% focused purely on Berkshire Hathaway while Soros spends most of his time on other activities.Traders burn out. Soros burnt out several times, often hiring other people to manage his Quantum Fund (he started the fund in partnership with Jim Rogers). Trading, compared to Buffett-style investing, is a high stress activity. 5 years for a good trader is a rough average.Soros has a very complicated trading strategy, very different from most other traders. A major reason, I believe, why few other traders are on the Forbes 500 list.Another reason is tax. Soros’s Quantum Fund is incorporated in a tax haven (Americans can’t be investors). So Soros is compounding his money tax free.Trading profits are usually taxed at income tax rates, so even if you were making 100% a year you’d quickly be in the highest tax bracket.Which of course makes Buffett’s non-tax-free achievement even more impressive.In summary, if Soros couldn’t make 100% profits per year from trading, year in and year out, nobody can.By the way, I’ve written a book on the subject, The Winning Investment Habits of Warren Buffett & George Soros. which goes deep into the differences—and surprising similarities—between Buffett’s, Soros’s, and other successful investors’ and traders’ approaches to the markets. You can read excerpts here.
What is the biggest scam that every Indian must be aware of?
The distance buyer scam of OLX.You post an item for sale. A buyer with a non-Indian name contacts you, says he is from abroad, will pay you 10K extra for shipping the product abroad. That he will send money first and then you ship.You get email that money has entered your bank account. The email id looks so similar to your bank email and you fail to notice. Email reads, ‘money will be withheld by bank and you can redeem it by providing proof that you have shipped the material’. You will also receive text message of the same. Except that, no money has been sent. You have been scammed to ship a product, free of cost.I have been contacted by such scammer twice while I tried to sell a laptop. This time, I gave one such my whatsapp number because in olx chat, he did not mention anything fishy. Just negotiated the deal. So, here follows the snapshot of our conversation.i knew it was a scam and wanted to waste some time of this guy.if any fellow quoran wants to send this poor lady(me) some money, please note that all details of account is fake.address was fake. I wanted somebody to come to that address and waste some more time. However, redirected the chat to have some more fun.please note, i have never engaged in sex chat with my partner. Please forgive my foolish attempt at it.I tried to see if he is foolish enough to try to paytm me. I had a paytm account long back but now, i dnt even have the app installed.So, if you have also wasted your time reading the whatsapp chats, pardon me for this many screenshots. I just wanted to make this answer memorable enough to you so that you don’t forget the fact that‘if a deal looks terribly profitable, it is fake.’STAY SAFE.EDIT: When somebody says “fuck you”/”fuck your mother”, I don’t imagine the exact scene of him fucking me or my mother. Instead I just take it as a slang. Most of the times, when somebody says “motherucker” he/she does not really mean that you do that really. So, I would rather not react to such statements. My mother’s sanity or respect does not go away if I don’t defend her in such nonsense scenario.