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Saturday, 8 December 2007

Gems of Wisdom from Warren Buffett

Warren Buffett started with US$100 in 1956 and turned it to over US$40 billion fortune for himself. Amongst the world's Richest people, he stands out as the one who make it not by being an entrepreneur but by investing in businesses run by great entrepreneur.

Below I share with you some gems of wisdom from Warren Buffett.

Cheers!


Surround yourself with people you trust and you’ll do fine.

if you could only make 20 investing decisions you would think harder about those decisions and make more money.

You need temperament and discipline not IQ. You need extraordinary discipline. That is the hard thing.


Q: What do you look for in a business leader?
Focus, Mission, and Projected confidence.

Pick good heros (role model). Who your heros are determines who you will be.
Your inner score card matters more than your outer score card.

The time to do it is today. You may not be doing it in 30 years. Seize the day.

Do not do something because you feel the need to do it. Do it because you want to do it.

On How to Invest:
Phil Fisher “Look for one business that you never sell.” That really set in for me. I used some old and some new. Charlie basically got me to take large amounts and really taught me the value of a good business. Buy a wonderful business even at a stiff price.


Q: How do you determine the people who will lead your businesses?

WB: You look for people who are extremely passionate. How do you determine passion?

Does he love the money or does he love the business? He may sign and never work, and then the deal will not work. I look for people who would rather run the business than do anything else in life. That is what is going through my mind. They have to prefer going to work over everything else.

Q: How do you find a good investment?
I love business of investing because all of the knowledge is cumulative.

It was like a treasure hunt literally. I used the Banking and Finance manual.

If you write a pretty good story about a business and you find out the things you like and all the details like a good journalist, you can pick up good investing ideas. Buy $5 bills for one dollar. You cannot look where others look.



I think our currency will be weak for the next ten years. For sure Gold will do well in a shock. People will run to it when they are scared. A nuclear bomb will cause gold to go up. But long term, gold is not where you want to be.


Any area where labor is a large part of costs is hard. I would not own Coca-Cola if labor was a huge cost.


Secret of Warren Buffett’s success? He has a Mastermind Alliance with Charlie Munger. Read what he said and you’ll agree.

WB: 59 years we have worked together. We are mental partners. We have never had an argument and we never will. We do not even talk to each other much any more.
Just knowing what he would say on something without even talking about it is important.

Q: What did you think of the Long Term Capital debacle?

LTCM got killed on the mark-to-market because everyone knew their positions.

To quote Mark Twain, “History doesn’t repeat itself, it rhymes.”

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