The greatest investor the world has ever known is Warren Buffett. His personal wealth estimated at over US$ 40 billion is second only to that of Bill Gates. The class ‘A’ shares of Buffett’s company, Berkshire Hathaway, closed on October 23, 2006 at US$ 100,000 each. In ‘62 when he first bought they were $7–8 apiece. Buffett’s wealth is self made. In 1944, as a 13 year old he delivered newspapers.

Buffett has become a legend within his own lifetime. Legions of his shareholders make a pilgrimage to his hometown of Omaha in Nebraska US, to attend his annual shareholders meeting.

My brother, Rahul’s eyes glow when he recounts how he managed to sit next to Buffett’s table at a restaurant and even managed to exchange a few words with him. Rahul handed Buffett a book on health. As a shareholder in Berkshire Hathaway, Rahul was not alone in wanting his long life.

What makes this man so successful? The answer is so simple that few will believe it. Buffett shuns complexity like the plague. If he cannot understand what a company does, he will not invest in it. If he cannot, in a few sentences, explain why he is investing in a company, he will keep away from it. While the world was investing in technology shares, Buffett for years kept away from them.

Everyone laughed at him. Investors said that he had lost his touch. “He is old and doesn’t understand computers and IT”, they said. Buffett kept his counsel and said it was impossible to pick losers from winners. He was proved right. Eventually as the Nasdaq - the US technology stock exchange - crashed by over 70 per cent, it was Buffett who had the last laugh. So what were the companies that the maestro invested in? You are in for a disappointment. There were no esoteric names like Enron, Tyco, Worldcom or Global Crossing. Buffett merely invested in across-the-world-household names such as Coca-Cola, Gillette and American Express. Besides these, he also invested in other companies which are familiar to everyone in the US or Europe. It is amazing that no one could copy him. The human mind simply refuses to accept simplicity. Investors dart in and out of the market, make computer simulations, while Buffett merely invests and invests big in a few companies and holds his stocks almost in perpetuity.

After all, if you have decided a business is good why sell it and buy another one? But this is too simple. We seek complications, and if we can’t find it, we will invent it.

This is the reason why countries like Nepal do not succeed. They seek complexity. It would be too easy to accept that the people of Nepal can be rich by trading and, therefore, all the government has to do is to get out of the way. All that is required is unilateral abolition of all restrictions and tariffs on trade. But what actually happens? The government will make bilateral, tri-lateral, and multilateral treaties. Why not just let people in Nepal buy and sell to Chinese, Indians, or Japanese as they wish. Do we need a treaty between Kathmandu and Patan for people to buy and sell from each other? What difference does it make if the person you wish to deal with resides in another country?

Some say that dealings with other countries are different – foreign exchange is required. So what. In an open market this would merely mean one more transaction to complete. Many countries – Singapore, Hong Kong, Dubai, Switzerland, USA and UK – allow their citizens to trade in foreign currencies, why can’t Nepal?

What about taxation? Do we need a complicated structure of excise, customs, VAT, and income tax? Why not just eliminate most taxes, let the people retain their money, invest in their businesses and make this country full of opportunities and wealth? But, as I said, that is too simple, government must first extract every rupee that it can from us and then spend most of it on its unproductive staff, and, perhaps return a part to us. I do not understand how this is going to make Nepal rich.

(The writer can be contacted at: everest@mos.com.np)