Many people perceive Warren Buffett to be the wisest investor of our generation. I’ve read 1000+ pages about him. I admire much of what he’s done, and I try to learn from him.
No mere mortal is worthy of imitating in every regard. I won’t imitate Buffett as a dad or a husband. Many people admire him for his folksy wisdom. I’m not concerned with that, either. Even so, there’s an awful lot to learn from “The Oracle of Omaha.”
Buffett purchased his first stock when he was 11. He bought three shares of Cities Service Preferred for himself and three for his sister, Doris, at $38. Later he sold the stock for $40. He wanted to skip college and go right into business when he graduated from high school, but his father vetoed that idea.
At Columbia University, Buffett learned from Benjamin Graham, the 20th-century founder of value-based investing. Buffett had several jobs, including working for Graham for two years, and managed several partnerships before the Berkshire Hathaway saga began.
Berkshire Hathaway started life as two New England textile companies. Berkshire Cotton Manufacturing Company and Hathaway Manufacturing were both founded in the late 19th Century. In 1955, they merged to become Berkshire Hathaway. In 1965, a group of investors, led by Warren Buffett acquired a controlling interest in the company.
Berkshire Hathaway became the investment vehicle for Warren Buffett. According to The Motley Fool, $100 invested in Berkshire Hathaway in 1965 would now be worth roughly $2.42 million.
I admire how Warren Buffett invests.
Buffett’s initial investment model was Benjamin Graham, He’s playing the long game, so he looks for companies with high-quality senior leadership, strong cash flow, and high returns. Then he lets them continue to operate in the way that made them successful to begin with.
Buffett’s investments shared two things. One is a homeostatic business model—the idea of grafting float (almost free use of capital) onto a holding company so it could respond internally to the changing market. The other is the power of compounding.
Buffett is famous for minimizing risk. He declined to invest in arenas, like technology, which he didn’t understand.
I admire Warren Buffett’s focus.
For Buffett, focus is a single-minded obsession with an ideal. He believes intensity is among the prices of excellence. Both Buffett and Bill Gates report that focus is the most important reason for each of their successes.
Buffett is a learning machine. As an essentialist, he focuses his time on discovering and exploring options. He’s willing to adopt other people’s better ideas. For example, Charlie Munger persuaded Buffett to stop buying “cigar butts,” dying companies with high yields but limited future. Together Munger and Buffett showed the dramatic power of acquiring income streams that had” moats around them,” high barriers to entry.
I admire the way Warren Buffett builds trust
With the passing of time, Buffett learned subtle ways of dealing with people. He learned how to anticipate others’ reactions and to phrase things in a non-threatening way. That strength was among the reasons that Buffett was able to acquire several companies without a competitive bid process. Multiple owners agreed to sell to him even though they probably could have gotten more from other buyers.
One example is a story I told in my book, Building Legacy Wealth. In 2003, Buffett agreed to buy McLean Distribution from Walmart after a single meeting. He and the people at Walmart trusted each other. That made it possible to close a deal quickly that would have taken battalions of attorneys months to accomplish.
Trust will have the same impact on your pursuit of legacy wealth. As you work with a great broker and build your relationship, trust will increase. That, in turn, makes it possible for you to move faster and seize opportunities you might miss otherwise.
I admire what Warren Buffett has done with his money.
Warren Buffett is rich and frugal, like many of the investors I’ve worked with who became millionaires. He still lives in the stucco house he bought in 1957.
Buffett wants his children to make their own way and he wants to support them. He thinks the perfect amount to leave his children is “enough money so that they would feel they could do anything, but not so much that they could do nothing.”
Warren Buffett may be the greatest philanthropist of all time. In 2006 he pledged to give away nearly all of his fortune. By 2023 he had given away more than $50 billion and recruited other billionaires to pledge to give away half their fortunes.
What about you?
Who is one of your role models? What makes that person’s life worthy of imitation?