5 Things You Can Learn from Warren Buffett
The "Oracle of Omaha" has plenty of advice to impart to entrepreneurs and investors alike. Clint Greenleaf, the founder and CEO of Greenleaf Book Group and a member of our Board of Directors, shares some takeaways from the annual Berkshire Hathaway meeting.
Posted 5/ 6 11 at 1:00 PM | Business Trends, Board of Directors, Money, Management, Leadership, International Business
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This was my second year in Omaha for the most famous annual corporate meeting in the world. Berkshire Hathaway has been an American icon for years, and the recent drama surrounding David Sokol made this year's meeting, held on April 30, extra special. I found the event fantastic and walked away with some great pearls of wisdom. Warren Buffett, the "Oracle of Omaha" and Berkshire's legendary chairman and CEO, and Charlie Munger, Buffett's deputy, were on their A-games and did not disappoint. Here are a few takeaways for entrepreneurs and investors alike:1) When facing a crisis, face it head on. This is simple enough, but the media circus around Sokol's controversial trading of Lubrizol -- and subsequent high-profile departure from Berkshire Hathaway -- had the potential to cast a dark cloud over the proceedings. Instead, Warren and Charlie spoke early and often about it. They faced hard questions from media and individual shareholders and responded with brutal honesty. While the matter has clearly more life in the public eye, their upfront nature took the focus off of them and onto the facts. Because of their willingness to face the questions, they downgraded the crisis early in the meeting. Lesson -- don't shy away from crisis.
2) Don't worry about inflation -- just invest in the right companies. Consumer products that don't use capital to grow or operate are great inflation hedges. Sees Candies, the tastiest of Berkshire's 70 companies, is a cash cow with pricing power. While Warren and Charlie see inflation on the horizon, they also see businesses that can quickly raise prices when costs go up as the best hedge around.
3) America is still the best place to be. As rough as the economy and the geopolitical landscape may be right now, Warren is still bullish on America. He said that given the choice to be born anywhere in the world, at any time in history, he'd still pick today in America.
4) Gold is pretty -- and that's about it. If you were to take all the gold in the world and jam it into a cube, it would be about 67 feet on each side. Warren explained that you could look at it and touch it, but that's about it. That same cube would be worth about $8 trillion. In comparison, you could buy ExxonMobil 10 times over, all the farmland in the United States and still have a trillion in pocket money. While he sees the attraction to gold right now, he believes it's in a bubble.
5) Humor is critical to a great organization. There were several times during the meeting when Warren or Charlie said downright hilarious things. Charlie's most famous quote during these meetings is "I have nothing to add." This usually comes after Warren speaks for a few minutes. During the Sokol questioning, they were asked why they weren't more harsh with the press release describing Sokol's departure from the firm. Charlie gave great advice many hotheads should embrace: "You can always tell someone to go to Hell tomorrow, if you're still mad." But the funniest moment of the meeting came in the first video montage when the entire cast of The Office made a special cameo -- "Michael's Replacement." In the video, the folks at Dunder Mifflin found out that Warren would be the new regional manager and Charlie would be his No. 2. Probably one of the funniest skits I've ever seen.
As usual, it was a great meeting. The lessons are important and every meeting inevitably produces these sorts of gems. I highly recommend that you mark down next year's event -- Saturday, May 5, 2012, in Omaha, Neb. It's hard to top the cast of The Office, but somehow, I'm sure Warren and Charlie will manage to do it.
Comments (Page 1 of 2)
The great lesson from Warren Buffet is to invest in something that has a great cash flow. Unless you're buying the entire company that means a great dividend. Do not let let CEO's waste YOUR money.
Given a chance, CEO will take all the money that should be paid to stockholders and waste it on schemes to enrich themselves and their egos. Stock buybacks reward stockholders willing to become ex-stockholders, in an effort to inflate managements stock-option bonuses. Many acquisitions are ego driven rather then economic.
But the great ambiguity of Mr. Buffet is that he'll tell you the importance of cash flow, but he doesn't share any cash flow with his stockholders. I guess that is why he is one of the richest men in the world.
I just developed a new strain of micro-organisms that turns worthless scrub land into prime farmland.
It could actually be worth more than that 67 foot cube of gold. Would that make me the richest man on earth ?....Al-
Oren Grossi made some very good points, but the best was the comment on cash flow. The company draws off from the companies it owns large cash "dividends" but passes none on to BH stockholders. BH stockholders are supposed to get capital gains but that has not been true recently.
Yep, Mr. Munger Ecouraged me to Start Investing way back in the 80's after having him "In the Back Seat of My Limo" being in the Limo Business out of Chicago.. He was intown for Business Conference
I started to put my $ into a Balanced Fund at Vanguard ( VWELX) and what Non IRA $ into Brkshire B shares when it came out as my Alternative Roth ..
Both Have turne dout Ok.. It was better than Not saving and investing Nothing..
As his Investing College, Jack Boggle says.. Invest in something, be it bonds or Set up a Balanced Portfolio, but Invest into Something.. for once you spend that $ , other than into a House, it's gone for good..Only 2 things that Either Maintain or Gain in value, Land & Investments in Bonds/Stocks.. what's your Car and TV worth today? How about your furniture and your clothes?
and your Jewlery, watches ?
I THINK AND BELEVE THAT,WARREN BUFFETT IS THE BEST AND A GREAT HUMANITARIAN,HE SHOULD SHOULD GO DOWN IN HISTORY,TO SET AN EXAMPLE AS ONE IN HIS CLASS SHOULD BE. MR BUFFETT IS FAR ABOVE HIS COLLEAGUES.
Mr. Buffet is an example of a Great American. The opportunities to make money and save money are there, you just have to work hard for both. Working hard seems to be the lost art nowadays, my grandfather always told me that "The harder your work, the luckier you are." He came from an orphanage where his brother died in the flu epidemic because they could'nt afford the medicine.
Warren is a serious Finance Analyst, Cost of Capital drives the investment beginning..............and end, and of course he is a
womanizer,he has a nice Family !
Hope he stops working so hard, he should have two years to wind down and
have some time to himself !
Who cares about Buffett, he is another pompous billionare that loves to see himself on TV...This country is going broke and the markets are going to collaspe again..so who cares about any of this crap..
Right on , dude
Mr. Buffett is a man I study. With no money available to invest, I simply paper trade (pretend) just to gain the education, wisdom, and self-control. Coattailing Mr. Buffett for sometime, I have attempted to create a mini-Buffett that similates his. I do not think it is ever too late to start. With that said I have started so many times only to fail, but I picked myself up and then started again. I wish I could spend one day or week with Mr. Buffett studying his life, habits, ideals, and what appears to be a great love for our country. He has much to offer, so I say to those who criticize....don't unless you have walked in his shoes. I personally look forward to a 3rd Buffett stock like a 'Baby mini Berkshire' for those who cannot afford the other two in place. Our children and small ones would be the best to enable that conquest given the fact problems of the future will become far more challenging than our critics of today's world now face. One thing said above in the comments was that real estate/land are great investemnts. Was that meant as undeveloped land or REAL estate such as our homes with the land underneath? I was just given the honor of overseeing a small account for a friend who does beleive in y choices if I could invest....WHAT A COMPLIMENT!! YET SUCH A LARGE TASK NO MATTER HOW SMALL.
This Liberal bum! he critizises, The very same system he got rich on!!Forget Him!!
YOU'RE PROBABLY RIGHT THAT THE MAN IS A GREAT AMERICAN TO SOME . I BELIEVE HE IS JUST ANOTHER " GREEDY " S. O. B . FROM WALL STREET . THESE TYPE PEOPLE ARE JUST LIKE POLITICIANS , THEY ALL BECOME THIEVES , LIARS , AND PROSTITUTES . THE MAN ALWAYS HAS A HUMANITARIAN DEAL WITH BILL GATES OR SOMEONE OF THAT NATURE TO DO SOMETHING " FOR THE WORLD " , NOT FOR THE HARD WORKING EMPLOYED AND UNEMPLOYED JUST TRYING TO KEEP THEIR HOME , PUT FOOD ON THE TABLE , SEND KIDS TO SCHOOL , PAY TAXES , AND JUST BE GOOD CITIZENS . NO , HE'S LIKE ALL THE REST , THE RICH GET RICHER , THE POOR GET POORER AND THE MIDDLE CLASS SUPPORTS IT ALL . AND YOU CALL THIS A GREAT AMERICAN ?
Oh yeah....I'm sure you have met him personally so you definitely have the grounds to make that kind of judgement... Have you even read any of his books? Do you have any idea as to the extensive measures he takes to make sure that his financial reports of ALL of his companies are accurate and full of internal information that most companies aren't even required to provide? By the way he has bought out NUMEROUS dwindling companies and turned them around and provided even more employment opportunities and helped many small business owners make it big. I think you should do a little more research....
I GUESS NOW YOU ARE GOING TO TELL US WHAT A FINIANCIAL GERU YOU HAVE BECOME . MOST PEOPLE WHO MAKE SERIOUS MONEY DO IT BY DOING SOMETHING NOT BY READING BOOKS . I HAVE MANAGED TO DO PRETTY WELL FOR MYSELF , NOT COPYING "THE MAN " . HOW ABOUT YOU ?.
I am well on my way as a matter of fact, and the amount of money that either of us make has nothing to do with the point I was trying to make, or your initial point. You are changing the subject. You are right, there are plenty of ways to make money. My point is that, unless you have some concrete knowledge in regards to his character and have knowledge of his financial and managerial history, then you really can't criticize him. By the way, there is nothing wrong with reading books and learning from the best :)
SINCE YOU LIKE TO READ SO MUCH CHECK THE HEADLINES IN WSJ , NYT ETC . ABOUT HIS TOP EXEC . RESIGNING OVER POSSIBLE INSIDER TRADING AND CONFLICTS OF INTEREST . " THE MAN " SAID HE HAD NO KNOWLEGE OF THESE ALLIGATIONS . GREAT MGT . SKILLS ? NOT KNOWING WHAT'S GOING ON IN YOUR OWN COMPANIES . CASE CLOSED - ENJOYED THE EXCHANGE - GO MAKE SOME MONEY , THEN YOU CAN WRITE YOUR OWN BOOK .
to all the struggling citizens forget what Buffy makes ur right instead giving to aids lots in usa need money for health care and college for their kids. as far as wars are concerned bush, Channey, and gang of ---holes should be charged with the deaths of young boys and girls and mained that costs this country billions.in Italy college is free health care is free, also Canada, Sweeden and on and on. how do they sleep at night???????????????? as a Korean war vet going to the VA anger me what i see.....
The man donated almost his entire fortune to one of the greatest charities on the planet, and still people claim he's a "pompous billionaire that loves to see himself on TV." He went from next to nothing to the third richest man in the world in a few decades and still people criticize his intelligence and savvy. As soon as you match or exceed his feats and then still maintain the philanthropic attitude, you may criticize his actions at will. Until then, quit wasting your time bashing him and go figure out how he does what he does.
While most of these theories work at times, the fact that large sums of money are needed for investments-to balance some of the losses, people get disappointed when at the end of the year they have to pay taxes on even losses. Investing in something you know is the best tool. In the early 90's I made frequent trips to Brazil and was impressed by their steel(SID) and Petrobras dealing with oil. I invested in both and if I sold the two stocks, I will have almost half a million dollars in profit.
Buffy not my hero! Those billions could be helping many desperate families ! Greed is a terrible thing.