Memo 04: Buffett as the Exception, not the Rule
Every so often I’m approached for career advice by younger finance graduates. Many of them are bright, ambitious, and enthusiastic — drawn to the energy of public markets, the allure of trading platforms, and the dream of making a quick buck. They speak of hedge funds, equity research, “alpha.” And earning big bonuses! They want to pick stocks, beat the market, and become the next Warren Buffett.
I always take a moment to slow the conversation down. They will all have studied finance but have forgotten (or chosen to forget) about the Efficient Market Hypothesis (EMH), which posits that in highly liquid, information-rich public markets, most securities are priced fairly. In other words, the opportunity to “beat the market” consistently, without taking on excessive risk or leverage, is vanishingly small—especially for those without an edge.
And then, almost like clockwork, they say: “Yeah, but what about Warren Buffett?”
The Buffett Myth
There is no question that Warren Buffett is one of the greatest investors of all time. But what is often missed is why Buffett was successful, and more importantly, when he built his foundation.
Buffett’s early years were spent not behind a Bloomberg terminal, but on the ground—driving to small towns, visiting obscure companies, and sitting with management teams. He pored over dusty financial statements, often digging into footnotes no one else had read. In an age before continuous disclosure (introduced in the US in 2000) and real-time data feeds, Buffett was able to generate proprietary insight—not because of insider information, but through legwork few others were willing to do.
There’s a famous story from his early days, when he invested in a small pinball machine business. He didn’t model discounted cash flows on a spreadsheet — he visited barbershops, saw the foot traffic, understood the cash flow from the machines, and calculated return on capital by hand. Other anecdotes tell of Buffet driving to the site of businesses he was interested in. He would count cars in the parking lot, speak to employees or managers, and observe operations firsthand. [1]
This wasn’t stock-picking—it was private equity in disguise, just executed in the public markets of the 1950s.
In another case, Buffett invested in a struggling textile manufacturer (Berkshire Hathaway) after visiting management and physically inspecting operations. Ironically, he later described this as one of his worst investments—but it illustrates the hands-on nature of his process, which has no analogue in modern brokerage research.
In the same vein in agricultural private credit, farm visits and face-to-face meetings with the farmers and their family give invaluable insight into the underlying management and hence the credit risk you are taking on. You can discern a lot from a simple farm inspection!
Buffett’s Early Edge Was Informational—and Temporary
Buffett had an informational edge at a time when few others did. He didn’t need insider information—he created his own informational asymmetry through work ethic and direct access. Today, those same companies would be covered by 14 sell-side analysts, crawled by AI models, and dissected daily on Reddit and X.
In fact, Buffett himself has acknowledged this. He’s often said that if he were managing $10 million, instead of billions, he could easily earn 50% per year. But he isn’t—and can’t. His current strategy is built on scale, control, and capital allocation at the corporate level. That’s not something a graduate with an online trading account can replicate.
The Lesson: Go Where the Market Isn’t
That’s why, when I give advice, I urge younger finance professionals (and investors) to look beyond public markets for their careers or investment opportunities. The private equity, private credit and alternative asset spaces remain structurally inefficient. The deals are negotiated, not traded. The risks are underwritten, not priced by consensus. And the returns are often tied to real-world performance rather than sentiment.
And the evidence bears this out. Private‐asset managers exhibit both strong performance and repeatability of performance. Kaplan & Schoar (2005) [2] show that top quartile private equity partnerships tend to remain top quartile in subsequent funds — reflecting true skill in sourcing, execution, and value creation.
In my own career, I’ve found more opportunity—and more meaning—by working directly with business owners, borrowers, and founders. Like Buffett did in his early years, I focus on understanding people, motivations, assets, and structure. But unlike Buffett, I do this outside the glare of public markets.
Conclusion
Warren Buffett’s success is legendary—but his methods are not replicable in today’s public markets. His edge came from a combination of timing, temperament, and tenacity that allowed him to build something unique at a time when it was still possible.
So, when a young graduate or an investor asks, “What about Buffett?”, I smile and respond:
“He was great. But if you really want to invest like him, you’d have to leave the office, meet businesses face-to-face, and find value where no one else is looking.”
And these days, that’s almost always in the private markets.
[1] The Snowball: Warren Buffett and the Business of Life by Alice Schroeder.
[2] Kaplan, S. N., & Schoar, A. (2005). Private equity performance: Returns, persistence, and capital flows. The Journal of Finance, 60(4), 1791–1823.