3 Things I Learned from Warren Buffet - picture of arrows going up with fingers pointing at it

3 Things I Learned from Warren Buffet

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Please enjoy this guest post from Nick who blogs over at BayCrazy.com.

Warren Buffett is often ranked the richest man in the world.  With that being said, I think it’s fair to say that he knows what he’s doing. However, just because somebody happens to have the most money doesn’t necessarily mean they’re the best at managing it.  However, in Warren’s case it’s more-so about how he made his money, kept his money, and made more of it. And keeps making more of it. I’m writing about WB (how many different ways can I refer to one man?) not only because of his wealth and greatness as a collector and multiplier of money, but also due to his general mindset, life philosophies and integrity. I think there’s perhaps a misconception among those who only know his name and maybe that he’s a ‘fat cat’ or a ‘Wall Street guy’ and just another greedy, ruthless gambler of big money.  However, that couldn’t be further from the truth.  Study Wazza just a little bit and you will discover a truly interesting, empathetic, intelligent and brilliant man. The big W doesn’t carelessly gamble money or throw multitudes of cash at walls to see what sticks, rather – he makes old-fashioned investments, in companies that he understands. And cares about. And companies that he then jumps on-board to try and improve and make better. He has decent ethics, an amazingly neurotic and detailed gift for analyzing businesses from the ground-up, and an amazingly in-depth understanding of a multitude of financial principles.  I really think he’ll go down as one of the most celebrated modern minds in business due to what he stands for, how he goes about his business, and the character he brings to the table. OKAY, enough blathering, let’s get down to business: here’s 3 things you can learn from Warren Buffet:

1. Invest in Companies, not Stocks.

Wozzo’s basic advice is that you see shares as a percentage of a company. I know that sounds obvious, given that ‘you already know a share is that’, but his point is that modern-era investors seem to have lost sight of this and basically gamble and look for quick wins and ‘sure things’, and I really didn’t fully realize how much I think like this myself until he reiterated the reality of the situation. See shares as people and ideas, and your entire perspective can change for the better.

2. Invest in Things You Understand.

Don’t look at what’s ‘hot’ or invest based on what you think may rise or fall next week, month or year. Mr. Buffett wisely advises that you try to truly understand any business that catches your eye.  You should try to understand the financial details, the management, the profits, and the growth.  Then you should invest as much as you can, into the COMPANY, and stay with them for the long-haul. The goal is to pick winners based on facts, information, and understanding.  Stick with those winners based on informed-opinions, as opposed to guessing, hoping, and gambling.

3. Live Well, Well Beneath Your Means.

This one actually speaks to an ideal that many bloggers in this sector aim to achieve on a daily basis.  Well, if you want to learn from the best: old man Buffy is the master of living below his means.  Although he has such an impressive fortune, he still lives in the first house that he bought and drives his medium-priced (sometimes second-hand) cars until they’re truly done and dusted.  He also dines at a local eatery, preferring to eat working-class munchies rather than high-class cuisine. Is he profoundly skimpy? Perhaps, but only by upshot. He’s actually just incredibly stuck in his ways and doesn’t crave material things or flashy items. He sticks to what he understands… just like with investing.

 

Who is your favorite financial icon?  What have you learned from them?

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27 Comments

  1. I think Warren Buffett is probably the biggest bad-ass alive. Love the guy. We can learn so much from him not only about money, but about life.

    1. True that. Like I imply in the article – there’s many preconceptions people probably form about a man like that but when you look in to him… he’s one of the most ethically consistent men I’ve come across… he’s obsessive and overt to change in the way somebody who is Autistic may be… very interesting man.

  2. Warren Buffett is an enigma. While on the one hand he is famous for living thrifty in a way, he also owns the worlds most expensive sailboats, among several other billionaire only purchases. He maintains the aura of a nice, extraordinarily intelligent grandfather, yet has ruthlessly run businesses he has control over. An interesting man, indeed.

    1. Oh really? I didn’t know that.

      So you think he actually lives more of an expensive lifestyle than he lets on and perhaps pretends to be something he’s not?

      That seems unlikely to me given every other detail I know about his life; the fact he still dines at his local eatery, the same of which he has for about 30 years.

  3. Warren Buffet is awesome! I’ve heard these three tips before, and I definitely think they are worth following. It’s interesting how many people invest in stocks instead of companies; if the company isn’t going to do well long-term, it doesn’t matter how undervalued the stock may be on a given day or week.

  4. anyone who owns Dairy Queen and See’s Candy is AWESOME in my book.

  5. Living well below your means has been key for us. Good thing though is as a person increases wealth whats well below your means is still a great lifestyle. I believe in investing in companies as the stocks don’t always follow suit. To many people buy with emotions so the stocks get hammered.

  6. I read Warren Buffett’s authorized biography, The Snowball: Warren Buffett and the Business of Life. It provides some fascinating insights to WB as a young boy, already showing the characteristics that would serve him well as an investor. I strongly recommend it.

    1. I’ll have to check that out. I’ve always struggled to pay attention in regards to reading, which is ironic considering that I’m a writer 🙂

  7. Living below his means derives from his view of money: when he looks at a suit costing $200, he sees the value of that $200 twenty years from now. So he sees that price not as $200, but $10,000. And he says he can’t bring himself to spend $10,000 on a suit of clothes. At least he couldn’t back then.

    Because some of his ways have changed, like those expensive suits he buys now. He flies only by private jet. His company bought one, then sold it and bought NetJets, an entire fleet of private jets. He doesn’t talk about that side of things too much, and when he does it’s in self deprecating terms: “I’m the only person who can buy a $5,000 suit and make it look cheap.”

    His basic philosophy of spending time on his purchases hasn’t changed, though. And that, more than anything else, is his secret to success. That, and what he calls “the art of doing nothing” (i.e. patience, and sticking with your decisions).

    Great post!

    1. The art of doing nothing haha.

      Sticking to your decisions in all areas of life can seem to have great effects in a multitude of ways… diligence can pay off, so many people are so fickle and give up so easily.

  8. Hats off to Warren Buffet, I am a big fan. So many things learn from him. Very nice post Holly, Thanks for sharing …..Good one !

  9. I love Ramit. His book really got us off to a terrific start with the concept of financial automation. He actually made dealing with money fun for us and his book is chock full of valuable info. I am sure he uses Buffet as an example at some point too;)

  10. Believe it or not, there are a lot of people who do what Warren does! The only difference is magnitude! The surprise statistic I heard the other day was that 50% of the country is not invested in the stock market! Where is their savings? Perhaps, they do not have any.

  11. I think living below your means is the best example set by WB. Just because you have tons of money doesn’t mean you should be wasteful with it.

  12. I love his story, and I can’t get enough of his lessons/teaching. Talk about practicing what you preach and setting an incredible example for people!

  13. Warren Buffett is an extremely interesting man, I’m currently reading his biography “The Snowball”. It goes into a lot of his personal life as well. Very interesting read. I’m going to do a post about it when I’m done. Lots of great lessons!

  14. Living below your means is one of the best suggestions out there because it’s something anyone can do, even if they aren’t an investor yet. Buffett is probably one of my favorite icons because his speeches are very interesting to listen to. Plus he not only gives great financial advice, but also marital advice 🙂 He once said “What’s the secret of a great marriage? It’s not looks, nor intelligence, nor money — it’s low expectations.” Haha, so true 😀

  15. W Buff (as I like to call him) is awesome. He knows what he is doing and that is because he doesn’t do anything that is really that outstanding our outside of the box. He just does investing well!

  16. These are great tips to learn. I’ve always followed the rule that I must understand what I’m investing in. I don’t want to get caught up and burned in something that I didn’t fully understand from the beginning. Warren Buffet is a very smart man, so I’m going to take any advice he has to heart.

  17. Good article. Buffet is really a man to admire.

    Here’s my favorite quote from him, mostly because it flies in the face of individual investors either trying to follow what Buffet does or be a mini-Buffet.

    “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expense) delivered by the great majority of investment professionals. Seriously, costs matter.”

  18. Warren Buffet is an icon for every businessman and entrepreneur. He earns money, and he also knows how to respect money.

  19. It would really be interesting to know about the different experiences, hardships, and successes of someone who is often ranked the wealthiest man in the whole world. Truly you can learn a lot from him both about what’s he’s good doing at and about life.

  20. Warren really is an example to be followed. Even being a billionaire, it maintains its simplicity. His book The Snowball is enriching, a great read.

    Met the blog today and am enjoying it. Congratulations! : D

  21. Really good advices which you learned from Warren Buffett and it seems that you have applied in your life. I totally agree with him when saying to invest in what you understand and always reinvest your profits in order to grow money from money. Good luck I have to say!

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