Result: The birth of a buy/hold investor.
Not quite. In 1956 he forms Buffett Partnership Ltd with $100K in seed money. By 1962 the total fund worth was $7M. That's a 70X increase.
Inflation would make the $100K worth $901K. Then came a series of 5 partnerships added, which I believe added $520K. By 1959 he had accumulated $620K from investors for his fund. In today's money that would be $5.2M. The point being he really didn't have a 70X increase due to his investing. Then again, 11X isn't too shabby either.
It's unclear what type of investments he made, but it likely didn't involve buying, and holding for long periods of time. One of Buffett's first known big wins was Dempster a windmill company bought in 1962, held 1 yr, before being sold for 3X profit.
The point being, Buffett had the seed money, and in his early years, he was not adverse to very short term buy/hold. He even dabbled in the copper futures market, and made a couple $M in his early days. Where Buffett got his reputation for buy&hold was really outside the market, as a private venture capitalist. Buy a National Furniture or a Coke, with reoccurring revenue.
Buffett now tells anyone who wants to listen: When you buy a stock, you should be prepared to hold it 9 yrs if need be. Easy for him to say! The problem for Buffett's advise is the average retail investor, can not afford to wait 9 yrs. By one estimate the ave 59-61 yr old has $161K in their IRA or "savings". Most can't afford a stock going down -20% over 3 yrs, and then waiting another 6 yrs for it to recover. Living expenses will exhaust their account long before then. Even less are going to be able to buy the shop around the corner, and make millions over a 6 yr period. But a Buffett? He's not going to be starved, and broke in 9 yrs, after BKH started to buy a railroad stock, and it took a -20% dip. No worries, just keep holding. Eventually just buy the whole thing, and add it to the collection of BHK companies generating $Bs of revenue in the form of divys.
So how much of Buffett's 9 yr rule can be applied to the ave retail investor? My conclusion is very little. Same planet, but different universe from the Buffett world. The little part being recognizing potential growth stocks. But the hold part lasts as long as it takes for the big kids to rotate out of the given sector. Again, something a Buffett at BKH doesn't ever have to worry about. They are the biggest big kid on the block, and don't need to follow anyone.
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