Morgan Housel

the the companies that would sell to him were like this is this is where we want our baby to go and buffett himself was going to get it at better terms and have better flow than anyone else doing it also important to point out this should not take away from any of his success but it's important to point something like this out buffett once pointed out that over the course of his career he has purchased 500 stocks and he made the vast majority of his returns on 10 of them and

And Munger once pointed out that if you look at all of Berkshire's deals over the 50, 60 years that it was doing it, if you remove the top five, its returns fall to average.

And so this is true for almost any endeavor that you look at.

The vast majority of Berkshire's returns, and whether it's Berkshire buying whole companies or Buffett as basically a hedge fund manager back in the day, the huge majority of the success comes from a very small minority of what he did.

I think there's probably two takeaways from it.

One is the idea that if you're in a game like that where you don't have a perfect success rate, like if you're a pilot, you should have a perfect success rate.

Every flight should land.

It should be 100% every time.

If you're an investor and it's not like that, you have to be very comfortable with a lot of things not working.

And a lot of investors are not.

A lot of investors, it will destroy their ego, their soul, or the trust among their investors.

If they're like, hey, we picked 10 stocks and three of them went bankrupt and four of them did okay, but one did really well.

Even if on average it works out, a lot of people just can't handle that kind of volatility.

So coming to terms with the idea that it's always going to be a tail-driven business, just the psychology of that is important.

The other, I think, more important takeaway, though, is the humility of how hard it is to emulate this.

It would be one thing to learn how to be a pilot and learn the mechanics of an airplane and of aerodynamics and to figure out how you can land the plane every time and you can teach that skill.

It's another to be like, man, if you're a great investor and you're so smart and you know everything,

You're right five and a half times out of 10.

And that's if you're good.

And that's like, it's a very humbling statistic just to put people in their place, I think, in a good way of how difficult this business can be.