This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Secret Lesson of Gates' and Buffett's Extreme Wealth

Buffett hopes to give his fortune away through Gates' foundation, but that job gets harder as the hoard gets bigger. Imagine -- Gates now has to find a way to put over $130 billion to work for good causes. What 2013 shows is that job may actually grow.

Buffett's annual letter to Berkshire-Hathaway (BRK.A - Get Report) shareholders shows him taking a very conservative tack. His big investments are in insurance, regulated utilities, financial companies and manufacturing. He admits to not understanding technology and his one big tech investment, IBM (IBM), lost money.

That conservatism is also reflected in his advice. At 83, he still emphasizes long-term value, he still likes index funds and bonds over more active investments, he still invests mainly in America and he still doesn't like pundits, even though reporters insist on treating him like one.

During good years -- and 2013 was a very good year -- fortunes rise almost by themselves. It's important to realize when you're counting your own wins from last year that it takes no special genius to make money during a boom.

The real lesson Buffett wanted to emphasize this year was staying the course in a bust. He described in detail two real estate deals he made during the course of his long career. Both were distressed properties managed by government. Avoiding panic during a panic is the real key to getting wealthy, he wrote.

But the deeper lesson of both Gates and Buffett is this. Anyone can look smart when things are going well. When things are going well, wealth can grow faster than it can be given away.

Gates and Buffett have barely begun to give, and the result of that giving will transform the world of your grandchildren, as Carnegie's giving transformed the world for Buffett and Gates.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BRK.A $219,650.00 1.20%
MSFT $40.90 -0.17%
AAPL $126.35 2.50%
FB $83.18 -0.14%
GOOG $551.83 0.64%


DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs