In order to get reasonably good returns, you don’t need to be an expert in the asset class that you are investing in.
In order to explain this, Buffett uses the example of a farm that he bought in 1986. He had very little idea about farm operations. But with the help from his son, he did a quick calculation on how much the farm will yield and what will be the operating cost. Around 28 years down the line, the output of the farm has gone up three times and its value has gone up five times.
The basic argument is that you need to “keep things simple and don’t swing for the fences”.
In order to explain this, Buffett uses the example of a farm that he bought in 1986. He had very little idea about farm operations. But with the help from his son, he did a quick calculation on how much the farm will yield and what will be the operating cost. Around 28 years down the line, the output of the farm has gone up three times and its value has gone up five times.
The basic argument is that you need to “keep things simple and don’t swing for the fences”.
