I’ve always enjoyed following Warren Buffet (known as the Oracle of Omaha and one of the most successful investors of all time. He’s amassed a personal fortune worth 82.9 Billion and is now one of the world’s greatest philanthropists after giving 40.8 Billion to charity.
At 85 years old he’s still working hard every day as the Chairman and CEO of Berkshire Hathaway, which is a conglomerate that owns a multitude of companies.
To put the success of his company and his investment savvy into perspective, when Warren bought into Berkshire Hathaway in 1964 his shares were worth about $12.37 each. Today each share is worth $303, 300.00. Had one of your parents or grandparents had the foresight to invest $10,000 in Berkshire Hathaway when Warren first took over their holdings would be worth over 240 million dollars today. Right place right time heh? Amazon, Facebook, Netflix, Google anyone?
Now what really interested me was some of his wise insights in his just-released 2018 Annual Letter to Shareholders. At just 14 pages it’s a fun, insightful read. Filled with some history, wit, strategic thinking, and the financial results for 2018. It’s well worth a read when you have a spare half hour. And take much longer if you care to analyze some of his and his lifelong Business partner and Co-Chair Charley Munger’s investment decisions.
Some Warren gems:
When he was explaining how he assesses the intrinsic value of the Berkshire share price, he includes the estimated taxes that would be due if he were to sell shares of some of Berkshire’s minority holdings. He noted that one might ask why he doesn’t include this tax hit on the businesses Berkshire wholly owns? He says… (page 6 – 9th paragraph – 3rd sentence)
“Truly good businesses are exceptionally hard to find. Selling any you are lucky enough to own makes no sense at all.”
I love this way of looking at his business holdings. You rarely hear entrepreneurs, executives, business owners or professors say something like this.
The other gem I found in his letter was in relation to his explanation of why he doesn’t like using debt, and if so only sparingly, as a way to build his businesses. He sees this as a Russian roulette strategy that only works if you’re in a position to share only in the upside and never the downside of a business. He says that strategy would be madness for Berkshire. (page 10 – 4th paragraph – 3rd sentence)
“Rational people don’t risk what they have and need for what they don’t have and don’t need.”
Well put Warren, and for all of those who have had their life savings in your trusted hands the last 60 years, I’m sure they are retiring in comfort and security knowing that you are planning your succession in the same manner that you built your fortune and the value of your/their company.
Thanks for your wit but mostly your wisdom. Now I can’t wait for the market to crash so I can afford one of your shares. 🙂
Dominic Kotarski is the author of international best-seller “The Making”. He writes, speaks, inspires, motivates and teaches the most important aspects of your business including Sales, Coaching, Team-Building, People Management, and Business Development. Get weekly access to his blog & training videos FREE by subscribing HERE! and when you sign up you will get Instant Access to his Sales Skills Training Video.