BLOGNAME: LOUDER THAN WORDSAn informal, stream-of-consciousness reflection on business ideas, events and issues in modern business, modern life and with some specifics to the web-software industry by Paul Tomori, Internet Entrepreneur
|Teaching a New Dog Old Tricks|
pearls of wisdom from the Oracle of Omaha
By Paul Tomori
Friday, May 08, 2009 at 14:41:29 (EDT)
Well, I almost made the pilgrimage to the Woodstock for Capitalists this past weekend, but some of the obligations in my increasingly-busy life got in the way (i.e. I lacked sufficient sleep to make the trip!). I am speaking of course, of the Berkshire Hathaway Annual General Meeting for shareholders led by none other than Warren Buffett, the oracle of Omaha.
Oh, how I wanted to travel to Nebraska! Never thought I would have such a destination aspiration!
I first discovered the genius of Mr. Buffett after years of dabbling in the stock market, sometimes winning, sometimes losing... until alas, I determined that winning and losing were for people playing games. Investing is serious business... not the kind of pastime one should treat very casually.
In my long-distance apprenticeship under the direction of Mr. Buffett, I have basically unlearned everything I thought I knew about bonds, stocks, mutual funds, money markets and the like. It has truly been a classic case of a new dog (me) learning the old tricks of a much older dog (Mr. Buffett).
To say that it has been humbling for me is as understated as Mr. Buffett's own self-opinion. He speaks constantly about his investing errors and about how dumb he has been (i.e. buying airline stock when the airline industry has never consistently turned compelling profits). However, considering his extraordinary track record of good judgement overall, I should only make as many "errors" as Mr. Buffett in my life...
Here are some of my favourite Buffett-isms:
1. On not scoring an important and potentially lucrative deal: "I was happy before the deal fell through and I'll be happy after the deal fell through"
2. "Wall Street is the only place where people drive to in Bentley's to take financial advice from people who arrived by subway"
3. "Don't obsess about one disadvantage when you have so many advantages"
4. "I am fearful when others are greedy and greedy when others are fearful" (case in point, the explosive internet bubble of 2000, a craze that Mr. Buffett wisely steered clear of)
5. "Chains of habit are often too light to be felt until they are too heavy too be broken"
6. "I don't look to jump over 7 foot bars. I look for 1 foot bars that I can simply step over"
7. "In the short term, the stock market is a voting machine, but in the long term, it's a weighing machine". This quote actually derives from Benjamin Graham's philosophy (Graham was Buffett's early mentor). It is designed to signify that rarely does stock price accurately reflect the true value of a company. Mr. Buffett ignores the ups and downs of his holdings and sticks to his portfolio as long as the long term prospect indicates strong recurring revenue.
8. "Only when the tide goes out, do you see who has been swimming naked". Madoff was swimming naked for a lot of years before the economic collapse revealed his crimes.
9. "Someone can enjoy the shade of a tree today, because someone else planted a tree a long time ago."
10. "Time is the wonderful friend of the good company, but the enemy of the mediocre company"
There are many many more "pithy aphorisms" from the great one, but don't let the simplicity of his statements trick you into thinking he really just is a folksy lucky guy who emerged from corn fields in the mid-west... He is a savvy individual and true exemplar for everyone, investors or not, business people or not.
I think the key is to actually be indulging one's interests... presuming those interests to be rational... To quote Mr. Buffett one last time: "You only have to do a very few things right in your life so long as you don't do too many things wrong."
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