Wit and Wisdom from the Oracle of Omaha. Book#83
I read this book Tap Dancing To work in the summer 2016. I browsed through it recently and still enjoyed it. This is not a bio but a collection of fortune articles published between 1966 to 2012 that Carol Loomis put together.
As an editor at Fortune magazine, where she has worked since 1954, she has written extensively on Warren Buffett and is well known as the business journalist on closest terms with him. For the past 35 years she has edited Buffett’s famous and eagerly-awaited annual letter to the shareholders of Berkshire- Hathaway.
I have read quite a bit about Buffett over the years but I never get tired of it. First of all because it’s really fun! He has a terrific sense of humor. Second because there is a lot of easy to grasp plain wisdom in his words on many topics. Third because he is not only a tycoon but also a huge philanthropist and a modest man (He never sold one share of BRK and still lives in the same house he bought when he was 25 years old). Fourth because he is intellectually honest about his mistakes and life lessons.
Here are some of the wit and wisdom takeaways on which I will reflect:
On buying a business
We prefer large, simple businesses (if they use a lot of technology we won’t understand it), with consistent earning power, little debt, management in place (we can’t supply it) at an attractive offering price (we don’t want to waste time). We will not engage in unfriendly transactions. We can promise complete confidentiality and are able to respond normally within five minutes.
You should invest in a business that even a fool can run, because some day a fool will.
On business principles
The real trick is standing up on tip toe and not having anyone notice you. I.e.: outsmart your competitors while none of them notice. You end up staying above the crowd.
When researching the financials, here are questions that an investor can ask to the auditors to uncover any shenanigans:
-If you were the accountant would you have done the accounts differently?
-If you were an investor would these be satisfactory?
-If you were the CEO would you have the same audit procedure?
On the markets
Stocks are good on the long term. There are only two things you can do wrong: you can buy the wrong ones or you can buy and sell them at the wrong time. The truth is that if you buy right and at the right time, you never need to sell them.
When the value of stocks drops to 70 or 80% of GDP, this is a good time to buy.
On life’s principles and values
You are neither right nor wrong because people agree with you. You are right because your facts and you reasoning are right.
Darwin used to say that whenever he run into something that contradicted a conclusion he cherished, he wrote it down within the 30 minutes, otherwise his mind would reject it. Force yourself to always challenge your assumptions.
Leave your children enough money so that they can do anything, but not so much that they could do nothing.
Habits are like chains, at the begining they are too light to be felt until they are too heavy to be broken. Get good habits early.
Look at the behaviors that you admire in others and make them your own.
Work for an organisation of people that you admire, because it will energise you each day.
The asset to most value, aside from health, is interesting, diverse, and long-standing friends.
Inspiring.
If you want to learn more, watch this video below.
On a side note, I learned a bit about David Sokol from this book. I did not know about his involvement in NetJets before his insider issue. I added his book to my reading list Pleased but not satisfied.
My purpose in life is independence, fulfillment and a better understanding of how the world works. Like Charlie Munger, I believe in the discipline of mastering the best that other people have ever figured out. And like Sir Isaac Newton, I believe in our ability to see further than any others before us by acknowledging that we are standing on the shoulders of giants. With this blog, I hope to keep track of my learning about investing, business, decision making, entrepreneurship, and self-development while inspiring others to do the same. For the moment the format of this blog will be one post for each book that has influenced me, but I expect it to evolve over time. This is book number 83 of my journey. Join me now. John.
