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A Great Lesson from Todd Combs

December 20, 2013 | About:

I was reading the notes I took from this year’s Berkshire Hathaway (BRK.A)(BRK.B) shareholder meeting today. One of the things that stood out was an article on Todd Combs from the World Herald, which you can read here.

This article came out on the Monday of the Berkshire meeting. I remember reading it right before I went in. It was certainly not the fanciest article but absolutely one of my all-time favorites. I want to share with the readers the part I enjoy the most because I found it extremely inspiring and illuminating. Below is an excerpt from the article:

One of the students asked what he could do now to prepare for an investing career. Buffett thought for a few seconds and then reached for the stack of reports, trade publications and other papers he had brought with him."

“Read 500 pages like this every day,” said Buffett, or words to that effect. “That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”

"Remarkably, Combs began doing just that, keeping track of how many pages and what he read each day. Eventually finding and reading productive material became second nature, a habit. As he began his investing career, he would read even more, hitting 600, 750, even 1,000 pages a day. Combs discovered that Buffett's formula worked, giving him more knowledge that helped him with what became his primary job — seeking the truth about potential investments.”

Let’s do some simple math here. Assuming the average number of words per page is 250, then 500 pages means 125,000 words. The amount of time it takes to read 100,000 words depends on your reading speed. I don’t know how fast Warren Buffett reads but if I have to guess, I would say at least 1,000 words per minute, compared to the average of say 300 words per minute. At 1,000 words per minute, it takes Buffett a little over 2 hours to read 500 pages whereas at 300 words per minute, it takes an average adult almost 7 hours to read 500 pages.

This is based on the assumption that one actually reads 500 pages per day. Like Buffet said, all of us can do it, but not many of us will do it. Out of all the students Buffett talked to in Combs’ class, he is probably the only one who listened to Buffett’s advice and practiced the daily 500 pages drill. This is truly remarkable! No wonder Buffett eventually hired him as one of Berkshire’s investment managers.

I have been keeping track of the number of pages and what I read consistently since I got back from Omaha this year. With a very busy full-time work schedule, I can only manage to read between 200 to 300 pages per day. This mostly includes books, annual reports, magazines, periodicals, articles and industry surveys.

Although 200 to 300 pages is nothing compared to Combs and Buffett’s 1,000 pages per day, I am starting to feel the power of compounding knowledge. The first time I read an annual report of a crude oil shipper, I have to spend so much time understanding the terms. I may still spend a good amount of time refreshing my memory on the shipping terms the second time I read it. By the time I read it for the third time, it may take me 70% less time, and the knowledge applies to all other crude oil shippers. I know I am not a prodigy like Buffett so the process of repetition is inevitable. I think the key is to be consistent and persistent. My goal is to reach 500 pages per day in the next year or two.

Of course, reading 500 pages every day almost sounds brutal. But as Albert Gray shrewdly observed in his book "The Common Denominator of Success," “The common denominator of success – the secret of success of every man who has ever been successful – lies in the fact that he formed the habit of doing things that failures don’t like to do.”

Combs did just that. As such, he rightly deserved the job offer from Warren Buffett.

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