Wisdom of Warren Buffett

Personal Qualities

My friend recently recommended a very good video of a Warren Buffett’s talk at University of Florida in 1998 (video length around 1 hour 20 mins). Yes, it was a long time ago but it is always a pleasure to listen to his advices. We should be gratified that he is still so healthy and willing to share his knowledge with all of us. How often can you listen to a living legend on your computer screen anytime anyplace you want? With all the modern technology, we can easily spread his words and wisdom to all future generations of human beings. It is so amazing!

Every time you see Warren Buffett on the screen, you expect he talks about business and investment. However, in this video, my favorite part is when he talked about personal qualitative factors. He said that companies should hire people with all of the following 3 characteristics: Integrity, Intelligence and Energy. If one doesn’t have integrity, you don’t want him to have intelligence and energy (e.g. if not…). You want him to be dumb and lazy.

Long Position

Then Warren asked all the students to play a game with him. He asked if every students had to BUY 10% of a classmate as a future investment, who would you choose? He said that they shouldn’t choose someone with the highest IQ and school grades in the class. And they probably shouldn’t invest in the person who has the highest paying job or the best looking. Warren said they should look for someone who has Generosity, Honesty and Leadership. The one who will give credits to others even for his own ideas, the one who has the ability to carry out other’s interests, the one they can communicate the best to. Because he thinks that these are the keys to successful people, companies and investment.

In this game, he said people usually will end up choosing the one they admire the most in the class. So if you want to be admired, you should behave like the one you admired. Since you already own yourself 100%, you are stuck with it, you better be one that people choose to invest in.

Short Position

After that, Warren told them to choose a classmate that they would SHORT SELL. The one they expect his/her value will decrease over time. In this case, you shouldn’t choose the one who has the lowest grades, the lowest IQ or the worst job. Warren believes they should choose the person that turn them off. The one that they don’t want to be around with. It should be the person who is greedy, dishonest, likes to cut corner and always looks for shortcuts. These people will eventually suffer and fail to succeed.

The Benefit of Young Age

Warren Buffett thinks that we can get rid of those bad behaviors in a young age but a lot of his old friends can’t change anymore. They have a self destructive pattern and always turn off other people.

Treat Everyone Equally

Personally, I really hope I can treat everyone equally. I think I have done a pretty good job so far but I know I can do it better. There is a side story I would like to share. Although I didn’t pay much attention to NFL professional football, I recently know that the New England Patriots QB Tom Brady just gets the MVP award after a historical 16-0 season. When I read that article, I found something very interesting. Below are some of the quotes by the team owner:

“And the thing that I’ve found most interesting is if you talk to role players or backups how he talks to them and motivates them. He treats them like they’re going to the Pro Bowl, with that kind of respect.”

“He treats everyone in that locker room the same way he treats me or the coaches.”

It seems that all the successful person would have this quality, not only in the business world.

Moat of the Castle

When people asked what kind of company he would like to invest in, he talked about the concept of Economic Moat. If a business is a castle, he wants the castle has a wider moat to protect it. In business terms, it is talking about the importance of branding. A successful branding will help a business become a share of mind. When people think about happiness and dream, we will think of Disney. You won’t think of anything when we are talking about Universal Pictures or Warner Bros. This is something that will protect the company FOREVER. It is something that is very hard to get rid of in people’s mind. This is an idea I should pay attention to when I build my company in the future.

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