Nobody doubts how compounding works. They doubt the logic of using that to argue that someone achieving a sustained CAGR of nearly 20% over decades and being recognised by peers as the greatest money manager of the twentieth century when he was already one of the world's richest man in his sixties actually achieved "fairly normal" performance mostly down to living a long time.

I think people who are looking at long term wealth building are better off looking at John Bogle's work. The key is this, you absolutely must stick to investing in the index as a whole, but the issue there is fees you pay is a percentage of your investment, even if small, over years compounds against you. That might look small, but its a double digit percentage if done over decades. Hence picking a fund that charges you the lowest is the key.

Buffet does this better. He basically takes the float from insurance business(Geico) and invests in the index his company manages. This basically sets you up for a long compounding cycle. Translation- You are basically investing in the US economy.

Apart from this there are some base businesses in an economy that's under long term multi year climb. Now anybody who is staring at stock charts(weekly) will tell you eventually you do learn to 'Pyramid upwards' on stocks that are clear winners. Lots of literature has been written on this.

All said and done, you can be rest assured there only at best 10 such stocks in any economy. Once you find them, you do periodic audit if the companies are holding up good and just keep putting in money as time passes.

I don't remember where- but I remember reading, Fidelity found out the most profitable accounts belonged to people who were dead. That says two things. 1) You have to hold stocks for long periods of time, like really long periods of time(Index, and some of its constituents that are carrying most of the freight) . Most people won't make it. 2) Live long enough.

Quite literally once you gain the skills to pick stock. Next single biggest skill you can master is to be healthy and live long. These things take lots of time to work.

Buffet was richer than most nonagenarians put together in his fifties, and has been consistently generating 6x the US economy's growth over long periods. Insurance float is a neat source of capital if regulators will let you put it into equities and six decades of return usually beats four, but it's bizarre to pretend that BRK's outlying returns compared with other financial institutions come from longevity and access to capital. On the contrary, others have typically started off earlier with more, and generally donated rather less than Buffet over the last couple of decades...

The "index funds and live long" advice is sensible precisely because even the average savvy investor isn't likely to time value investments as well as Warren Buffet did.

Index doesn't go up. Individual stocks do. I mean a small section of the stocks within the index contribute to most returns. This is of course different in a bull market where lots of them go up at once. But even in choppy and bear markets, its a small section of stocks that do most of the upward movement.

You need to study index carefully, like pick each stock and study it. You will see Buffet isn't exactly investing outside the index, his investments come from inside the index.

You are not looking for needle in a haystack here. More like a thick loaf from a pound of bread. If you squint enough, you find them.