A complex man with simple taste, the “Oracle of Omaha,” Warren Buffett is the only person to have built a Fortune 500 top 10 company from scratch. The Snowball did an amazing job chronicling Buffett’s journey – the business of life. To Buffett, “The purpose of life is to be loved by as many people as possible among those you want to have love you.” My top 3 takeaways from the book:
1. Inner Scorecard:
Inherited the virtue from his dad, Buffett lives his life according to his own principles and standards, instead of measuring himself by an Outer Scorecard – other people’s opinions. To illustrate his point, he compared living his life to painting:
“I feel like I’m on my back, and there’s the Sistine Chapel, and I’m painting away. I like it when people say, ’Gee, that’s a pretty good-looking painting.’ But it’s my painting, and when somebody says, ‘Why don’t you use more red instead of blue?’ Good-bye. It’s my painting. And I don’t care what they sell it for. The painting itself will never be finished. That’s one of the great things about it.”
2. Focus:
At a family gathering, Bill Gates Sr. posed a question to Bill and Warren, “What factor did people feel was the most important in getting to where they’d gotten in life?” Both said “Focus.” Warren’s focus is tremendous in so many ways – on business, on his circle of competency & margin of safety, and on things he loves to do.
3. Integrity and reputation are invaluable.
After saving Salomon Brothers after the 1990s treasury bond scandal, Warren told every Salomon employee to be his/her compliance officer. “Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”
My favorite paragraphs from this book that can shed some light on the secrets behind Buffett’s success:
1. “The great engine of compounding worked as a servant on his behalf, at exponential speed and under the gathering approval of a public gaze. The method was the same: estimate an investment’s intrinsic value, handicap its risk, buy using margin of safety, concentrate, stay in the circle of competence, let it roll as compounding did the work. Anyone could understand these simple ideas, but few could execute them. Even though Buffett made the process look effortless, the technique and discipline underlying it actually did involve an enormous amount of work for him and his employees.”
2. “When Warren was a little boy fingerprinting nuns and collecting bottle caps, he had no knowledge of what he would someday become. Yet as he rode his bike through Spring Valley, flinging papers day after day, and raced through the halls of The Westchester, pulse pounding, trying to make his deliveries on time, if you had asked him if he wanted to be the richest man on earth—with his whole heart, he would have said, Yes.
That passion had led him to study a universe of thousands of stocks. It made him burrow into libraries and basements for records nobody else troubled to get. He sat up nights studying hundreds of thousands of numbers that would glaze anyone else’s eyes. He read every word of several newspapers each morning and sucked down the Wall Street Journal like his morning Pepsi, then Coke. He dropped in on companies, spending hours talking about barrels with the woman who ran an outpost of Greif Bros. Cooperage or auto insurance with Lorimer Davidson. He read magazines like the Progressive Grocer to learn how to stock a meat department. He stuffed the backseat of his car with Moody’s Manuals and ledgers on his honeymoon. He spent months reading old newspapers dating back a century to learn the cycles of business, the history of Wall Street, the history of capitalism, the history of the modern corporation. He followed the world of politics intensely and recognized how it affected business. He analyzed economic statistics until he had a deep understanding of what they signified. Since childhood, he had read every biography he could find of people he admired, looking for the lessons he could learn from their lives. He attached himself to everyone who could help him and coattailed anyone he could find who was smart. He ruled out paying attention to almost anything but business—art, literature, science, travel, architecture—so that he could focus on his passion. He defined a circle of competence to avoid making mistakes. To limit risk he never used any significant amount of debt. He never stopped thinking about business: what made a good business, what made a bad business, how they competed, what made customers loyal to one versus another. He had an unusual way of turning problems around in his head, which gave him insights nobody else had. He developed a network of people who—for the sake of his friendship as well as his sagacity—not only helped him but also stayed out of his way when he wanted them to. In hard times or easy, he never stopped thinking about ways to make money. And all of this energy and intensity became the motor that powered his innate intelligence, temperament, and skills.”
As you can tell, Warren Buffett READS A LOT!! Do you know that Warren Buffett spends about 80% of his day reading? He reads over 600, 750, or 1,000 pages a day! Check out WeZBest Reading Challenge and Buffett’s book recommendations.
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