I've always wondered why the rich don't get even richer. Let's take Warren Buffett, for example. If he makes more than 20% a year, technically he could double his money every three years. But that doesn't happen. If he's 10 billion, in just over 10 years he could have 100 billion. So why doesn't that happen?
Because they spend everything on women and cocaine.
On that scale, growth is not as linear as it seems. Managing giant sums carries risks, fiscal limits, legal obstacles and conservative decisions that slow that exponential growth.
Sure, I understand about taxes and regulations, but still with compound interest growth should be beastly. Right?
Yes, but it is not so easy to apply compound interest with huge amounts. It is not the same to invest a thousand dollars as ten billion.
At a certain point, money stops growing by speed and begins to grow by stability. The priority is no longer to double, it is not to lose.
So the limit is not mathematical, but practical?
At that level you're investing in huge things that don't move at the pace of a small fund.
If Buffett breaks down, it's not just his money that disappears, it's thousands of investors, jobs, and businesses.
It's hard for me to understand that someone as smart as him doesn't want to multiply his fortune any more.
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