Last week, I described the arithmetic that has made Warren Buffett the world’s richest man. The magic of compound interest over four decades, based on steady investment outperformance and a frugal lifestyle, has transformed a modest sum into an extraordinary fortune. But the larger question lies in the business economics. What is the secret of Mr Buffett’s investment success?

Mr Buffett is often identified as the heir to his mentor, Benjamin Graham. Graham emphasised intelligent investment based on fundamental value. But in Graham’s day the ability to read a company balance sheet made an investor intelligent. Many trading companies sold in the market for much less than the realisable value of their assets. As Graham recognised by the time of his death in 1976, those days are over.