Billionaire Warren Buffett: If Isaac Newton hadn’t “lost his career” because of stocks, he would probably have invented… the 4th law

Warren Buffett thinks that if Isaac Newton had survived in the stock market a little longer, he would have come up with the fourth law of motion. It is something that is not only about physics, but also related to stocks.

The great physicist Isaac Newton was one of the most intelligent people in human history, the father of the famous 3 laws.

Law 1 is: An object that is not acted on by any force or is acted upon by balanced forces, it will continue to be at rest or move in a uniform straight line; Law 2 is summarized by the well-known formula .a; And the 3rd Law is that force and reaction have the same magnitude but opposite direction.

But did you know, this genius with an IQ of 192 was also painful to realize that smart people do not mean smart investments.

On the stock exchange, Newton was usually a cautious investor. Most of his money is poured into various government bonds – reliable, non-volatile investments that provide a steady stream of income.

In 1720, this genius owned shares of the South Sea Bubble company, one of the hottest names in England at the time. As the company’s shares rose wildly, after careful thought, he decided to sell the shares, earning a profit equivalent to £7,000.

Soon, however, Newton wasn’t really proud of this decision as he realized that dumping the stock at the time was not a wise decision when the price was still growing exponentially. Unable to hold back any longer, he quickly swept into the crowd, buying the stock back at a price much higher than the profit-taking time.

However, this investment by Newton was not as successful as the first because the share price suddenly turned around and then plummeted to the level of 100 pounds. Newton officially lost £20,000 because of the wrong decision. And from that day on, the physics genius forbade anyone to say the word “South Sea Bubble” in front of him.

Referring to the stock investment story of his predecessor, “Oracle of Omaha” Warren Buffett also said that Isaac Newton was not a smart investor, when he let emotions interfere with his superior intellect. own, and of course crushed by the chaos of the market.

In his 2005 annual letter to shareholders, billionaire Warren Buffett wrote:

“A long time ago, Sir Isaac Newton gave us three laws of motion, which are the works of genius. But this genius’s towering IQ could not help him succeed when he did. invest in the stock market.

This even Isaac Newton himself had to bitterly admit: ‘I can calculate the motion of the stars, but I am powerless before the madness of man’. If it weren’t for the stock market crash, he might have gone on to discover the fourth law of motion:

For all investors, returns decrease with more portfolio movement.”

In the letter, Buffett said that if Newton had been a good investor, instead of losing a ton of money on the South Sea stock bubble of 1720, the genius would have devised the fourth law of motion. to explain the pitfalls of active investing. Accordingly, billionaire Warren Buffett believes that constantly buying and selling securities, shuffling the portfolio will consume transaction fees and erode profits.

He also famously said: “Successful investing in life does not require a towering IQ, business insight or information. What is required is a clear intellectual framework for decision making and the ability to keep emotions from destroying that foundation. You have to discipline your own emotions.”

This comment of his has helped future investors to learn more knowledge and investment thinking to avoid going into the “falling down” of their predecessors.

According to finance.yahoo.com;indiatimes.com