Joys Of Compounding: The Passionate Pursuit of Lifelong Learning

by Gautam Baid

In 2007, Buffett gave a talk to a group of MBA students at the University of Florida, wherein he shared his thoughts on the collapse of the hedge fund Long-Term Capital Management (LTCM): To make money they didn’t have and didn’t need, they risked what they did have and did need, and that’s foolish. That is just plain foolish. Doesn’t make any difference what your IQ is. If you risk something that is important to you for something that is unimportant to you, it just does not make any sense. I don’t care whether the odds are 100 to one that you succeed or 1,000 to one that you succeed. If you hand me a gun with a thousand chambers—a million chambers in it—and there’s a bullet in one chamber, and you said, “Put it up to your temple, how much do you want to be paid to pull it once?” I’m not going to pull it. You can name any sum you want but it doesn’t do anything for me on the upside and I think the downside is fairly clear. [Laughter.] So I’m not interested in that kind of a game. And yet people do it financially without thinking about it very much