If every one of Buffett’s investments is public knowledge, why hasn’t anyone become wealthy by simply copying his moves?

In 1956, Homer Dodge—then 67 years old and president of Norwich University in Northfield, Vermont—was formerly a physics professor at Harvard University. On Graham’s recommendation, he drove over 1,500 miles to Omaha to meet the 25-year-old Buffett, and subsequently decided to invest $120,000 to establish Buffett’s second partnership: Buffett Fund Ltd. Partnership terms: ・ Dodge was the sole limited partner; ・ Buffett served as general partner, contributing only $100 symbolically; ・ Profit allocation: Buffett received 25% of returns up to 4%; for returns exceeding 4%, he received 25% (some sources cite 50%; actual agreement terms prevail); ・ Losses were capped at Buffett’s capital within the fund—providing Dodge with a ‘soft’ principal guarantee. This $120,000 grew at an approximate annual compound rate of 19% over the next 27 years; by the time Dodge passed away in 1983, his family’s assets had appreciated to tens of millions of dollars. Throughout his life, Dodge used this wealth extensively for charitable causes—including a $20 million donation of artworks to his alma mater. 2. Sandy Gottesman Sandy Gottesman (1926–2022) was one of Berkshire Hathaway’s earliest ‘external billionaires’ and among the most frequently cited ‘invisible billionaires’ in Buffett’s six-decade investment legend. He met Buffett in 1962 through their mutual friend Bill Ruane, and the two became lifelong friends. In 1966, Gottesman joined Buffett and Munger in founding Diversified Retailing Co., each contributing $90,000; Gottesman held a 10% stake. This company was later merged into Berkshire Hathaway, and his original $90,000 ultimately converted into approximately 19,500 shares of BRK-A—worth roughly $6.5 billion. He served on Berkshire’s board of directors from 2003 until his death in 2022 at age 96. At the time of his death in 2022, he still held 6,402 shares of BRK-A—about 1% of the total outstanding shares—with a market value of approximately $2 billion. Including earlier holdings of Class B shares via family funds and personal trusts, his family’s peak total stake was estimated at $3–4 billion.

Chapter 11 Study Notes — Stock Market Valuation

Economic booms or recessions affect stock prices by influencing the risk-free rate, risk premium, and corporate earnings. It is widely accepted that stock prices are negatively correlated with both the risk-free rate and the risk premium, and positively correlated with earnings growth. In this section, we convert macroeconomic forecasts into corporate cash flow forecasts, then integrate these corporate forecasts with an appropriate discounted cash flow (DCF) model to estimate the intrinsic value of the stock market from a theoretical P/E ratio perspective. 1. Stock Market Valuation Investors commonly use the market P/E ratio to assess the outlook for future stock returns. Fuller and Hsia developed a valuation model known as the H-model. In this model, the dividend growth rate over a finite horizon is assumed to decline linearly until it stabilizes at a constant long-term rate—akin to an annuity or terminal-stage rate. The model incorporates: the expected long-term dividend growth rate in the final stage (gₛ), the number of years (N) over which the dividend growth rate declines linearly, and the long-term dividend growth rate (gₗ) prevailing at the beginning of the annuity phase—or at the end of year N. Assuming the initial annual dividend at time zero is D₀, the discount rate for the annuity is r, and the estimated intrinsic value under the H-model is V₀, the model is expressed as follows. The H-model was originally designed as a convenient framework for modeling situations where high initial dividend growth gradually transitions to a lower, sustainable long-term growth rate. However, for valuing mature, developed stock markets—where no supernormal growth exists—the Gordon Dividend Growth Model is more commonly used than the H-model. 2. Forecasting Stock Returns: Analytical Approaches There are two main approaches: top-down and bottom-up. In top-down forecasting, macroeconomic forecasts are used to predict returns for broad equity indices. These predictions can be further refined down to specific market sectors and industry clusters. Key steps include: Market Analysis: Examine valuations across different equity markets to identify those offering excess expected returns. Compare relative valuation metrics of individual equity markets against their historical averages to identify relatively cheap or expensive markets. Analyze trends in relative valuation metrics across markets to gauge momentum. Compare the expected returns of equity markets anticipated to outperform with expected returns of other asset classes (e.g., bonds, real estate, commodities). Industry Analysis: Assess domestic and international business cycles to identify industries expected to perform best within the strongest-performing equity markets. Compare relative growth rates and expected profit margins across industries. Identify industries likely to benefit positively from expected trends in interest rates, exchange rates, and inflation. Company Analysis: Within the strongest-performing industries of the strongest-performing equity markets, select the highest-potential individual stocks. Bottom-up forecasting begins with micro-level fundamentals of individual companies. Analysts use this information to forecast investment returns for each stock. Specific steps include: Company Analysis: Identify the fundamental reasons why certain stocks may outperform the broader market—without reference to current macroeconomic conditions. Determine why a company’s product, technology, or service is expected to succeed. Evaluate the company’s management, track record, business model, and growth prospects. Calculate expected returns for each stock using a discounted cash flow model. Industry Analysis: Aggregate expected returns across stocks within an industry to identify the strongest-performing industries.

H.B. Fuller Director Charles Lauber Purchases $99,984 of Stock

4 days ago

H.B. Fuller director Charles T. Lauber purchased 2,005 shares totaling $99,984 as the stock trades near its 52-week low. His direct holdings now exceed 16,000 shares plus convertible units.

Investing.com

2026-04-08

H.B. Fuller CEO Purchases $295,103.60 in Stock

2026-04-10

H.B. Fuller President Acquires Additional 14% Stake

2026-04-12

H.B. Fuller Receives Moderate Buy Consensus from Analysts

2026-04-12

Does H.B. Fuller (FUL) CEO Share Buying Clarify or Complicate Its Margin-Focused Investment Narrative?

2026-04-14

H.B. Fuller VP Receives Phantom Units and Discloses Option, RSU Holdings