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Ah. Passive income. It can indeed work out for you, but it is the fact that it can work out that makes it so tempting for scammers.

Warren Buffett claims that the best business that he was ever in was installing pinball machines in barber shops, then splitting the revenue with the barbers. See https://www.cnbc.com/2018/06/19/warren-buffett-bought-a-25-p... for verification.




Buffett lies. He had much better investments. I likes to tell us all stories. The big-finance reality is much more inside-tradingish than he wants us all to believe.


What investments do you think were better?

He's had far more income from other investments. But he turned $25 into $2000 in 3 years. That's around 331% profit per year, compounding annually. Given that he likes to invest in relatively mature companies, I can easily believe that no other investment ever showed a greater annualized return.

(Of course this calculation discounts his personal investment of time to run the business.)


I assume he has to invest in established companies just as a practical matter. If you have $50k, you can put it anywhere from the local donut shop to Apple. If you want to invest $50 billion, your options are significantly more limited on what you can do without outright owning the target company.


I turned $0 into $100k this year. Infinite return if you exclude personal effort.


>But he turned $25 into $2000 in 3 years. That's around 331% profit per year, compounding annually.

You run out of barbers rather quickly.


For just a tiny example of the "big-finance reality is much more inside-tradingish", see: https://en.wikipedia.org/wiki/Expert_network

Expert networks are an example of a side-gig which would compete with traditional "passive income" stuff for talanted tech folks.


Best doesn’t need to mean best investment. Best could simply mean what he enjoyed most. He likely thinks fondly of a simpler time.


Like i said, he likes to tell us stories.


He makes all his money from leverage. But instead of borrowing from banks or the capital markets whose willingness to roll over debts can be fickle, he borrows via the premia his insurance companies collect.

Away from this passive income has a terrible tax profile--unless you employ leverage (see above).


He was obviously joking

> As Buffett told Gates in the Omaha candy shop: “It was the best business I was ever in. I peaked very early in my business career.”




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