What I Learned from Warren and Charlie

Diana Alvear - Sunday, November 30, 2014

I don't look like I belong at a Berkshire Hathaway annual meeting. And that bothers me.

But that's exactly where I was last weekend, listening to two business icons dispense wisdom, some of it financial, all of it worthwhile advice in life.

It happened on a whim: the week before, I was having dinner with a friend who mentioned he was headed to the annual shareholders meeting in Omaha, Nebraska. To his surprise, I immediately asked if I could go with him. He said yes. I bought a ticket. Off we went.

How could I pass up an opportunity to listen to Warren Buffett and his best friend and business partner Charlie Munger hold forth all day with journalists, investment analysts and shareholders? The two are institutions the likes of which we will never see again once they pass. Two people who learned investing the hard way, making mistakes and improving their game, always with the intention of creating as much value as possible for their shareholders.

I first learned about Warren Buffett in 2008. I'd heard of him, but didn't really know anything about him until the economic collapse began. I covered the crisis as a journalist and saw firsthand how little we knew about what was happening. People were panicking. Life savings disappeared by the second. Homes were foreclosed on. And investors were desperate to dump their stocks.

Then Warren stepped in and wrote the now famous NYT op ed, "Buy American. I am."

I was fascinated. I had to know more about this guy. And the more I knew, the more impressed I was. This man was the antidote to the screamers on cable tv. He was calm. He was deliberate. He was humble.

Fast forward to this past weekend. By now, I knew plenty about his upbringing, his business, and his remarkable friendship with Charlie Munger. Now I wanted to hear the two of them in their own words, discussing why they do what they do and why they live how they live. I came away with so much more than I could have expected.

Bear in mind I am the furthest thing from a knowledgeable investor. I don't pretend to know much more about investing and finance and the stock market beyond the basics. But Warren and Charlie's wisdom is too good not to share, at least the stuff that carries over into life. It's a way to beat back the artificial urgency that's taken over the times in which we live.

1. Slow and steady wins the race:

Warren and Charlie don't invest in companies until they are absolutely sure that the companies are a good bet for the long haul, as in over the next 20, 30 years. If they don't see companies that fit their standards, they are perfectly content to sit on billions in cash. It's good advice. How often do we actively plan for the future when it comes to the partner we choose? The home we buy? The money we *don't* spend, money we instead save to plan for our later years? It's so tempting to live in the short term but short term mentalities don't lead to long term security.

2. Don't make decisions outside of your circle of competence:

At the meeting, they were asked about investing in tech companies since tech start ups are all we hear about these days. Warren said these companies were outside of his circle of competence. He simply doesn't know enough about them to gauge whether they'll be a good bet in the long run. This kind of humility is incredibly effective. If you don't know enough about something to make a reasonable, informed decision, then you may be better off not wading into the situation at all. If it's compelling enough, then do the work, do the research and see for yourself whether it's a good idea. Don't take someone else's word when it comes to big decisions. If you don't understand them well enough, do yourself a favor and don't act rashly.

3. If you want to know more about something, go directly to the source:

Warren mentioned how at the start of his career, there was no internet. So if he wanted to know more about a company, he'd pay them a visit and request a meeting with their executives. He'd ask to see their books, he'd ask about the competition. He also asked two questions in particular:

- If you couldn't choose your own company, which company would you buy?

- Which company would you sell short?

It's tempting to believe whatever the "experts" are saying, or what you saw on tv, or what the popular bloggers are espousing. Make up your own mind. Go to the source. Do your own research. Get firsthand knowledge and information so that you can make the best decision for YOURSELF.

4. To get a good spouse, you need to deserve one.

That gem came from Charlie and he related the saying to business, telling the crowd to get a great business partner, you need to earn one. I loved this one so much, because we (as in me and others I know) are so quick to point out what our partners, friends, loved ones are doing wrong when we should be reflecting on what WE can do better, on how WE can be better to the ones we love and with whom we work. I've been guilty of this for years, but I'm trying to be more mindful. It pays dividends when put into practice, unlike Berkshire Hathaway (nerd joke!).

5. Don't overpromise. Don't overreach.

True true true. We sometimes aim to do too much and then do none of things well. I tell my clients to master one thing at a time. You can't be everything to everyone. Hone your message. Get clear on what you are doing and why. Then build from there. Get really good at that one thing so that you know you can deliver what you promise. This holds true in relationships as well. Only make promises you can actually keep. People remember when you don't. Which leads me to...

6. Reputation matters.

This one came from Warren when he brought up the Salomon Brothers hearings in the 80s. He said he made it his mission to restore the reputation of the company after the scandal that brought it to its knees. Reputation is everything. When someone is known as a hard worker or an over deliverer, word gets around. But nothing travels faster than bad news. And you don't want to be the topic of that bad news.

7. Never be satisfied with your results.

Warren and Charlie mentioned some of their managers who work tirelessly to outperform their results. This is different than being a workaholic. It means relentlessly looking for ways to work smarter, deliver more, be a better person. It's a rewarding process because the returns produce a better you. More integrity, more ability, more experience. Celebrate the wins, big and small, but never get lazy. Keep working. Warren is 83, Charlie is 90. They've never stopped trying to improve their results, and the result? Two sharp guys who get better with age.

8. Having more stuff doesn't correllate with more happiness.

Warren's frugality is the stuff of legend. He lives in the same house he bought in 1958 and drives a car that's a few years old. During the meeting, Charlie was asked if he felt Warren's perspective had negatively impacted the company. Of course, he said no, and the two bantered about who was the more frugal. Warren chimed in and said he'd just never bought into the idea that having more stuff would make him happy. The crowd burst into applause at this statement, as did I. It's refreshing to hear one of the richest men in the world say something like that. Because it's true. Stuff is nice, don't get me wrong, but stuff will never make you happy. It's so simple but tough to put into action at times when we're constantly exhorted to upgrade our tvs, cars, purses, wardrobes. Resist. If Warren can, so can you. And about that private jet he once bought? He named it the "Indefensible." He makes mistakes but he acknowledges them.

9. Always value your stock above all others.

This was my favorite lesson of the day. It's so simple that it's easy to overlook the profundity of the message. We are so quick to devalue ourselves. We pick at our appearances and wish we looked like someone else in the movies or on the cover of magazines.

Now back to why it bothers me that I don't look like I belong at this meeting.

When I looked around at the people in that arena, they were mostly white and male. These investors are wise individuals, members of a community committed to creating a solid financial future. They believe in stability and security and common sense. And they'll be living well thanks to saving and investing over the longterm.

That's exactly what the rest of us should be doing. We can't depend on corporate careers to fund our retirements. The job market is unsteady. The government can't subsidize everyone. It's up to us to invest in ourselves. And the only way we can do that is by educating ourselves. Learning the fundamentals of the market and investing. Steeping ourselves in environments.

We accomplish nothing by caring more about the cars we drive or the clothes we wear today than we do about setting aside the savings that will support us in the future.

That $300 you spend on a designer handbag will be worth *** in 20 years. ***! What good does it do to look rich when your account is empty and your credit cards are overdrawn?

Take it from the Oracle of Omaha. Having more stuff does not correlate to more happiness. Peace of mind is priceless.


No Very

Captcha Image


Copyright © 2016 by Diana Alvear.