I've Followed Warren Buffett For Decades And These 10 Quotes Are What I Keep Coming Back To
This article was originally published on LinkedIn.
I’ve covered business for more than 20 years, writing articles for Fortune, Forbes, Bloomberg, Money, Fast Company, Time, The New Yorker and The Economist. Along the way, I’ve interviewed countless billionaires, many legendary investors, and the CEOs of some of the world’s largest companies. But in all those years, no business figure has fascinated and obsessed me as much as Warren Buffett.
Fifty years after taking charge of Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B), Buffett reigns supreme as the greatest investor in history, with a personal fortune of $70 billion. Berkshire’s latest annual report says its market value has soared by 1,826,163 percent under his leadership—an astonishing feat that boggles the imagination.
Buffett and his brilliant partner Charlie Munger are central figures in The Great Minds of Investing, a new book that I’ve written and edited, which will be published on May 29. It features profiles of 33 famous investors, along with portraits by Michael O’Brien, who has traveled all around the world over the past five years to take stunning photographs of Buffett, Munger, and the other investors in this book. Many of the great investors I interviewed for the book spoke of Buffett with awe. For example, Mohnish Pabrai told me that discovering Buffett changed his life, inspiring him to embark on a 30-year “game” in which his goal is to turn $1 million into $1 billion by following what he calls Buffett’s “laws of investing.”
If you want to get fabulously rich, it clearly pays to study Buffett. But what’s extraordinary to me is that Buffett’s wisdom goes so far beyond business and investing. Here, then, are ten of my all-time favorite insights from Buffett on how to build a successful — and happy — life.
“Unconditional Love Is Huge In This World”
In his profile for The Great Minds of Investing, Buffett speaks candidly about the most important reason for his success: the love and support he received from his father, Howard Buffett, a U.S. Congressman whom he revered. “My dad believed in me,” Buffett explains. “What I basically got from my father is unconditional love. Unconditional love is huge in this world… Whatever I did, he was all for it. It didn’t matter how much money I made or anything like that. It was just, ‘Do your best in whatever you take on.’”
“I Don’t Work To Collect Money.”
In the same profile, Buffett remarks, “I don’t work to collect money. I work because I love what I’m doing.” Speaking of his vast fortune and why he will give most of it away to the Bill & Melinda Gates Foundation, he adds: “I have no use for it. Society does have a use for it. And it so happens that I’m in a business where lots of money comes in when I do it right.”
Buffett has never cared about luxurious possessions, and he still lives in the modest house he bought for $31,500 in 1958. Last year, I made the pilgrimage to Omaha for Berkshire’s annual meeting and was particularly struck by Buffett’s public discussion of how little his fortune contributes to his happiness. “My life would be worse if I had six or eight houses,” he said. “It just doesn’t correlate.”
What money has bought Buffett is the freedom to live as he chooses. In The Great Minds of Investing, Charlie Munger explains: “Neither of us wanted to be a lowly subordinate in some dominant hierarchy that told us what to do and what to think. That’s why we got the money primarily—because we wanted the independence.”
“Live Your Life By an Inner Scorecard”
In 2008, Mohnish Pabrai and Guy Spier paid $650,100 for a charity lunch with Buffett (see pic above). Spier, a hedge fund manager based in Zurich, later recalled the meal in his 2014 memoir, The Education of a Value Investor, which I helped him write. What stood out most for him from this three-hour masterclass with Buffett was one life-changing piece of advice. “It’s very important,” said Buffett, “always to live your life by an inner scorecard, not an outer scorecard.”
Buffett illustrated this by asking: “Would you prefer to be considered the best lover in the world and know privately that you’re the worst—or would you prefer to know privately that you’re the best lover in the world, but be considered the worst?”
As Spier sees it, Buffett doesn’t care how others view him: instead, he remains true to himself and never compromises his own values. For example, he could save billions by moving Berkshire’s tax domicile to Bermuda, but he prefers to be based in Omaha. As an investor, Buffett thinks entirely for himself and invests most aggressively when others are fearful. This independent spirit infuses every aspect of his life—even his diet, which mostly revolves around burgers and Cherry Coke!
“Hang Out with People Who are Better than You”
Another memorable piece of wisdom that Buffett shared with Pabrai and Spier was this: “Hang out with people better than you, and you cannot help but improve.” Over the years, Buffett has spoken eloquently about how much we’re influenced — both for better and worse — by the people around us. In a fascinating interview with Gillian Zoe Segal, author of a new book entitled Getting There, Buffett warns: “If you hang around with people who behave worse than you, pretty soon you’ll start being pulled in that direction.”
At a Berkshire Hathaway annual meeting in 2000, Buffett also spoke about the importance of choosing the right role models, saying that he often tells students: “Just pick out the person you admire the most in the class, and sit down and write the reasons why you admire him… Nothing could be more simple than to try and figure out what you find admirable and then decide that the person you really would like to admire is yourself. And the only way you’re going to do it is to take on the qualities of other people you admire.”
Buffett’s greatest role models were his father and Ben Graham, who taught him at Columbia University and became his mentor. In Roger Lowenstein’s book Buffett: The Making of An American Capitalist, Buffett remarks: “The best thing I did was to choose the right heroes. It all comes from Graham.” Buffett’s father died in 1964, but a portrait of him hangs in Buffett’s office in Omaha to this day. Buffett told Gillian Zoe Segal: “I still wonder how he would feel about anything I do.”
“You’ve Got to Keep Control of Your Time”
During their charity lunch, Buffett showed Pabrai and Spier his diary, which was mostly empty. By contrast, he told them that his friend Bill Gates manages his calendar with total precision: it features maniacally detailed entries such as “6:47 shower” and “6:57 shave.” Buffett has designed his life so his own schedule is blissfully uncluttered, leaving him to spend much of his time reading and thinking without distractions.
Buffett is an amiable man, but he’s not afraid to say “No” to the vast majority of people who attempt to divert his attention. I still cherish a charming rejection letter he sent me in 2001 when I asked to interview him about Graham. Buffett replied: “Thanks for the invitation, but I’ll have to decline. I’ve talked about Ben on a number of occasions, so my appraisal of him is already out there for people to see. In addition, every interview I grant results in about 20 more requests. That’s a geometric progression that I have no inclination to foster.”
As Buffett once put it: “You’ve got to keep control of your time, and you can’t unless you say no. You can’t let people set your agenda in life.” Or, as Pabrai told me: “Warren cuts out a lot of crap.”
“It Takes Twenty Years To Build A Reputation And Five Minutes To Ruin It”
Another well-known investor whom I interviewed for my book is Tom Gayner, the president of Markel Corp, who has owned shares in Berkshire for about 25 years. He’s been hugely influenced by Buffett’s emphasis on always telling the truth. “What Buffett stressed,” Gayner told me, “is that it’s so important to be truthful because, if you engage in untruthfulness, ultimately you will lie to yourself. And that’s where you really get in trouble. So, it’s a habit and a discipline that, in addition to being the right thing to do, just works.”
Gayner adds: “Sometimes, people can build great careers and enjoy great successes for a period of time through bluster and bullying and intimidation and slipperiness. But that always comes unraveled… The people you find that just keep being successful year after year after year… are people of deep integrity.”
Buffett, who treasures his reputation for integrity, once told his son Howie: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you’ll do things differently.”
“Stick Within Your Circle of Competence”
Mason Hawkins, a famous investor who oversees about $32 billion as the Chairman and CEO of Southeastern Asset Management, is an old friend of Buffett’s. When I asked what impresses him most about Buffett, Hawkins told me: “The thing I admire most about him is his passion in knowing where his strengths are and keeping his focus on those strengths. I think a good example is turning over his assets to Bill and Melinda Gates, so he can continue investing and managing Berkshire… His discipline and his clarity of thinking is most exceptional.”
This intense focus on playing to his strengths — and largely ignoring everything else — lies at the heart of Buffett’s success. He once remarked: “You have to stick within what I call your circle of competence. You have to know what you understand and what you don’t understand. It’s not terribly important how big the circle is. But it’s terribly important that you know where the perimeter is.”
“Predicting Rain Doesn’t Count. Building Arks Does”
Buffett’s enduring success is built on one remarkably important concept. He once declared: “We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success.” In a 1995 speech, he explained that having a “margin of safety” means “always building a 15,000 pound bridge if you’re going to be driving a 10,000 pound truck across it.”
As I see it, this principle really applies to any endeavor in life that involves risk. I found myself explaining this to my teenage son last week while teaching him to drive: “Henry, you have to turn your head and look before you change lanes. It’s not enough to glance in your mirror because there could be a car in your blind spot. Remember what Buffett says: you always need a margin of safety.”
Buffett’s conservatism stems from his awareness that the future is profoundly uncertain. “In financial markets, almost anything that can happen does happen,” he warns. “And it pays to conduct your affairs so that no matter how foolish other people get, you’re still around to play the game the next day.” At Berkshire Hathaway, he keeps tens of billions in cash for a rainy day. And he never invests borrowed money, observing: “Whenever a really bright person who has a lot of money goes broke, it’s because of leverage.”
Even for Buffett, lasting success depends not just on talent, hard work and a scarily high I.Q., but on preparing for adversity. As he once put it: “Predicting rain doesn’t count. Building arks does.”
“Nice People Come In All Colors”
Re-reading Lowenstein’s biography this week, I was impressed to see that Buffett has long opposed prejudice and discrimination. For example, in the 1960s, “He quit the Omaha Rotary Club specifically because he objected to its racist and elitist policies.” Lowenstein adds that the Buffetts “were probably the only family” in their “lily-white” area of Omaha “that regularly and routinely entertained blacks at home.” Buffett’s wife, Susan, had a bumper sticker on her car that said: Nice people come in all colors. Their son, Peter, later recalled that the sticker was vandalized.
Buffett also pressured the Omaha Club — an exclusive dining spot for local businessmen — to reverse its policy of not admitting Jews. He expressed his dismay to the club’s board, which responded that Jews “have their own club.” So Buffett applied for membership of the Highland Country Club, which was founded by Jewish golfers who had been subjected to anti-Semitic insults. In 1969, the Highland admitted him as a member. He then went back to the Omaha Club and told them that the Highland was no longer entirely Jewish. Lowenstein writes: “Now the Omaha Club had no excuse, and quickly admitted some Jews.”
“The More You Give Love Away, The More You Get”
I’d like to end with my absolute favorite Buffett quote. His late wife, Susan, was a famously kind and loving person, and he has often said that marrying her was the most important decision he ever made. When Susan had cancer, he visited her in a hospital in San Francisco, then flew to Georgia to speak with a class of college students. According to Alice Schroeder’s book, The Snowball, the students asked him about his greatest success and his greatest failure.
Buffett replied: “When you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you. I know people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them. If you get to my age in life and nobody thinks well of you, I don’t care how big your bank account is, your life is a disaster.
“That’s the ultimate test of how you have lived your life. The trouble with love is that you can’t buy it. You can buy sex. You can buy testimonial dinners. You can buy pamphlets that say how wonderful you are. But the only way to get love is to be lovable. It’s very irritating if you have a lot of money. You’d like to think you could write a check: I’ll buy a million dollars’ worth of love. But it doesn’t work that way. The more you give love away, the more you get.”
ABOUT THE AUTHOR:
William Green is the author and editor of The Great Minds of Investing, which will be published on May 29. It features profiles of 33 famous investors, along with portraits by Michael O’Brien, one of America’s premier photographers. William has written for publications such as Time, Fortune, Forbes, The Economist, Fast Company, and The New Yorker. He collaborated with Guy Spier on the hedge fund manager's much-praised memoir The Education of a Value Investor. William also edited the European, Middle Eastern, African, and Asian editions of Time.
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