When I was a kid, my grandfather was the first person to talk to me about investing. Years later he turned me on to Warren Buffett, the legendary CEO of Berkshire Hathaway. In particular I made a point to read his annual letter to shareholders. I only ever owned Berkshire shares indirectly through mutual funds. And truthfully I don’t spend a ton of time analyzing individual stocks. But I still read the shareholder’s letters from Buffett because of wisdoms and the clever ways he gets his points across. The 2021 letter was released late February and you can see them all here. Here are 6 of my favorite “Buffettisms”.
- Quality > Quantity – Some people let their need for control get in the way of make the smartest choice. Buffet writes “owning a non-controlling portion of a wonderful business is more profitable, more enjoyable and far less work than struggling with 100% of a marginal enterprise.”
2. The Importance of Planning – Successful people from speakers to Navy Seals talk about the importance of planning and being prepared. Buffett had this very simple explanation: “Only when the tide goes out do you see who’s been swimming naked”
3. Career Advice – Buffet urges people to “work 1) in a field you like and 2) with people you like. Economic reality may prevent either of those for some time but that should be the quest.” As Mark Twain once wrote, “do something you love and you’ll never work a day in your life”. But Buffett’s addition to that to include with people you like really resonates with me.
4. On Teaching – He believed that teaching was great when successful for the students but also great for the teacher due to the Orangutan effect: “If you sit down with an orangutan and carefully explain to it one of your cherished ideas, you may leave behind a puzzled primate, but will yourself exit thinking more clearly.”
5. Being Bold – Though conservative in many ways, he’s never been afraid of making a bold move if he believed in it. More often than not he’s been right. “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold,” Buffett wrote in 2016. “When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.”
6. Hope and America – While we can and should always strive towards continuous improvement, often cynics become the loudest voice and decry how bad things are as if today’s problems are new. Buffet offers this perspective: “Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective.”.