Buffett’s tips 2

Warren Buffett’s advice to Wealth Managers, Wealth Owners and everyone

WELREX^® Director John Longo, CFA recently published, in collaboration with his son Tyler Longo, “Buffett’s Tips: A Guide to Financial Literacy and Life”. 

In a series of articles, we synthesise the key lessons from John and Tyler’s in-depth study of the “Sage of Omaha”.

Why is Buffett so happy?

Warren Buffett is well known for declaring his consummate happiness – best captured in this amusing quotation: “I get to do what I like to do every single day of the year. I get to do it with people I like, and don’t have to associate with anybody who causes my stomach to churn. I tap dance to work, and when I get there, I think I’m supposed to lie on my back and paint the ceiling. It’s tremendous fun”. The key for Buffett seems to boil down to this simple piece of advice: “Do what you love for a living”.

Whilst that’s not an option available to everyone the world over, the key learning is universally applicable: if you get to choose, choose a working life that you can enjoy.

It’s a truism that if you do what you love for a job, you will enjoy going to work. You’re more likely to be successful at your job since you’ll probably be very good at it, which will ultimately lead not only to more money but also to greater happiness. And no employer needs an elaborate staff survey or employee engagement study to prove the logic of that.

Part of that joy may lie in the significant diversity of the business portfolio that Buffett and his management colleagues straddle at Berkshire Hathaway – with investments in business across many sectors. It’s a well-known fact that Buffett takes pleasure in that variety diversity and regards it as a key contributor to the enjoyment and, as a result, performance.

Part of the skillset that Buffett has evidenced over the decades (and probably also enhances his enjoyment) is buying at attractive prices. The investment advice “Buy low and sell high” is as old as the hills. In Buffett’s case, he buys stocks or entire companies, following the style of investment called Value Investing.  Value investors try to buy things at deep discounts. Assuming the thing you’re selling rises in price, the lower you buy, the greater the profit when you sell. Buffett’s most famous investment is Berkshire Hathaway itself. He first started buying the stock way back in December 1962 at $7.65 a share. Looking at its financial statements, Buffett thought it should have been worth at least $20.00 a share. So, he thought he was getting it at about a 62% discount. He eventually bought enough shares to acquire full control of the company in 1965. And today? The stock is worth about $450,000 a share!

Buffett has always been crystal-clear in his advice – to everyone from students to professional investors alike – of the importance of developing strong communication skills. In one of author John Longo’s meetings with Buffett, a student asked what skills would be most valuable for having a successful career. Buffett’s response was simple – communication skills. He said that if you have a good idea and can’t communicate it well, it’s similar to “liking a girl and winking at her in the dark.” He also estimated that having strong communication skills, over time, could increase your earning power by 50% – an impressive return on anyone’s time investment!

Communication skills include speaking, writing, listening, and inter-personal skills. That is, skills helpful in getting along with, influencing, and leading other people. Buffett said the biggest thing that improved his communication skills was taking a Dale Carnegie course. Dale Carnegie was a self-help guru active during the first half of the 20th century, perhaps best known for his book, How to Win Friends and Influence People.  At last count, the book has sold 30 million copies worldwide, which speaks for itself. Take Buffett’s word for it. Polishing and improving your communications skills is one of the most important things you can do to improve not only your wealth but also virtually every other aspect of your life.