Warren Buffett - Leadership, Success and Happiness
Warren Buffett (1930- )
American investor in shares through his company, Berkshire Hathaway.
Nicknamed the “Sage (or Oracle) of Omaha”, where he lives, because he (pictured right) is so
The world’s second richest man. The richest, Bill
Gates, is his close friend and bridge partner.
Why is he so happy and successful?
1. Kindness and purpose
He wants to do something useful with his fortune. So in 2006 he announced that he will give it away, most of it
(85% or $30 billion) to Bill Gates’s charity that
helps the world’s poor.
His generosity is consistent with his
- opposition to inherited wealth.
- belief that only doing something creative and worthwhile makes you happy.
He was heavily influenced by Dale
Carnegie’s (pictured right) book, How to Win Friends and Influence
People, particularly Carnegie's first rule of success:
“Don’t criticize, condemn, or complain”.
2. Simple living and integrity
He is famous for his frugal lifestyle, living in the same house he bought in 1958 for $31,500,
and eating at his local steakhouse.
His salary is only $100,000 (tiny compared with other chief executives), because he thinks bosses should be paid
He is also a man of great integrity who is honest and never cheats anyone.
He was greatly influenced by his father, Howard (pictured right), and
first wife, Susie, who were both driven by social justice and a strong conscience.
For example, Martin Luther
King's fight for civil rights had a big effect on him
He says that the person you really are counts, not what other people think you are.
3. Motivator and team player
When he buys a business, he never interferes in the running of it, except:
- giving the company financial incentives for investing in business opportunities with high profits.
This autonomy motivates the company’s management by giving them the freedom to do what they think
His long time business partner, Charlie Munger (pictured right) , has given him huge
professional and emotional support.
4. Love of work
His job is like a hobby, and he loves it.
He is successful, because he and his employees read many hundreds of company annual reports every year to find
out information about the best companies to invest in (see point 5).
5. Financial genius and intuition
He has a brilliant memory and financial brain, which enables him to predict a company’s future profitability and
when to buy its shares, so he can make a profit on them.
So he asks before investing in a company:
• Can it beat competitors on product, price, quality and brand loyalty now and in the
• Are its profit margins, profit on invested capital and shareholder dividends consistently
• Is its gearing (i.e. debt as a proportion of its total capital) low?
• Are its profits high in relation to its debt? (so that it can repay its loans)
• Does it reinvest profits to invest in future profitable businesses?
a) invests less when speculation is high (like during the Internet boom), and more when investor confidence is
“Be fearful when others are greedy and greedy when others are fearful”, he says.
b) invests in well run companies that he understands like Coca-Cola.
c) likes to avoid debt, “so that I can sleep better”, he says.
6. Family and friends
He has three children from his first marriage to Susie (pictured right), who died in 2004.
They never divorced, but separated in 1977, when Susan introduced him to Astrid Menks,
whom he then lived with and eventually married on his seventy sixth birthday in 2006.
He plays bridge with his close friend, Bill
Gates (pictured right below together)
7. Humour and relaxation
He loves a good laugh.
“I wouldn’t mind going to jail, if I had three cell mates who played bridge”, he jokes about his favourite
His ability to relax is helped by being able to remember good things and forget the bad.
He has enormous confidence in his ability.
“I always knew I was going to be rich. I don’t think I ever doubted it for a minute”, he
Aged 11, he bought his first share with money from selling golf balls
At 14 he bought (then leased) 40 acres in Nebraska with money from his two newspaper rounds.
9. Good health
He has never smoked or drunk alcohol.
“You only have one mind and one body during your lifetime, so you should look after them”, he
He doesn’t let the arts distract him from his work. For 30 years he didn’t notice a Picasso painting in the
bathroom of his friend and Washington Post owner, Katharine
Key quotes on
Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1. Rule No. 3: Don’t get into debt.
It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
The investor of today does not profit from yesterday’s growth.
Key quote on success
It's only when the tide goes out do you discover who's been swimming naked.
Key quote on ethics and integrity
It takes 20 years to build a reputation and five minutes to ruin it.
If... nobody thinks well of you, I don’t care how big your bank balance is, your life is a disaster.
Key quote on money
It’s not that I want money. It’s the fun of making
money and watching it grow.