Warren Buffett knows about the customers’ yachts

6 March 2015 by Catherine Holdsworth in Business and finance

Warren Buffett, the world’s most famour investor, has written to his shareholders dispensing his wisdom and advice on how to be successful. In his letter, he recommended that potential investors read Where are the customers’ yachts? by Fred Schwed. Written in the 1950s, Schwed’s book builds on the idea that customers of stock-brokers and bankers do not earn enough capital to buy their own yachts but merely make the stock-brokers and bankers wealthy. 

Infinite Ideas’ Infinite Success series features investment writer Leo Gough’s modern interpretation of Schwed’s text. With Britain and Europe still struggling to emerge from the recession of 2008, Schwed’s book has never been more relevant. The recent HSBC scandal showed that the fat cats at the top of these international businesses are still living the high-life, creaming off their bonuses from the profits while the everyday customers are still feeling the pinch.

Surely with the success of the Martin Scorsese film, The Wolf of Wall Street, we’re all familiar with the above-the-law behaviour of those in the know, who wield the power over international trades and control the stock market. The everyday person is at the mercy of a few money-driven people determined to get as much as they can.

Yet Gough’s interpretation demonstrates that this doesn’t have to be the case. Rather than exploiting others, he draws on Schwed’s experiences and testimonies to show that you can be successful and not always at someone else’s expense. The stock market and investments are, like many things, a game that can be played for profit. The risk of playing too often and risking too much, as 2008 showed, can mean global crisis if not executed correctly. Gough provides an excellent reference tool for aspiring entrepreneurs drawing on the best of Schwed’s book and applying it to modern business scenarios. Give it a go, see if you can buy your own yacht!