87 Reasons We Love Warren Buffett – Motley Fool
Wednesday, August 30, is Warren Buffett’s 87th birthday. Each year, I celebrate the Babe Ruth of Investing’s birthday by adding another reason we love our hero.
1. Intricate, occasionally contradictory complexity hides beneath the “Aw, shucks” folksy charm. As a Forbes writer once put it, “Buffett is not a simple person, but he has simple tastes.”
2. Many people talk about avoiding the madding crowd, but Buffett actually does it by living 1,250 miles away from Wall Street.
3. He has a fortress-like internal scorecard on all things investing, yet a vulnerable, endearing external scorecard on many aspects of his personal life. See his penchant for seeking mother figures.
4. His perspective: “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
5. His perspective, part two: “All families in my upper middle-class neighborhood regularly enjoy a living standard better than that achieved by John D. Rockefeller Sr. at the time of my birth. His unparalleled fortune couldn’t buy what we now take for granted…”
6. He is that guy in school who tells you he may have failed the test — only to bust the top of the curve.
7. His time frame for the long run consistently exceeds his life span.
8. He says it better: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”
9. He’s human. He fears nuclear war and his own mortality. He’s frequently more adept at business relationships than personal ones. He can hold a grudge. His hero is his daddy.
10. Classic line: “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”
11. Once branded a stingy miser (rightly or wrongly), Buffett has evolved (assuming it wasn’t his intention from the start) into one of the most effective philanthropists I know. After growing his potential givings at a 20% compounded rate per year, he set a plan to give most of it away.
12. Perhaps as importantly, he put ego aside and outsourced his charitable decision-making to the Bill & Melinda Gates Foundation. Circle of competence at its finest.
13. “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” Contrast that with computer algorithm-based trading, day trading, and some of the moves you’ve made in your own account.
14. Buffett’s smarter than you and I, but he’s kind enough to let us feel otherwise.
15. David Sokol was once an heir apparent and arguably Buffett’s most trusted operations guy. But when Sokolgate emerged, Buffett stayed true to his word: “We can afford to lose money — even a lot of money. But we can’t afford to lose reputation — even a shred of reputation.”
16. “Derivatives are financial weapons of mass destruction.” He said it early, and we are reminded of it often.
17. In a glimpse of the nuance that some commentators call hypocrisy, Buffett uses derivatives himself. But he does so in a way that doesn’t threaten the entire financial system and explains exactly why in his annual shareholder letters.
18. He doomed himself from ever holding public office: “A public-opinion poll is no substitute for thought.”
19. I like juxtaposing these two quotes: 1) “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” 2) “Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway.”
20. “You only have to do a very few things right in your life so long as you don’t do too many things wrong.”
21. He has the ability to resist the allure of the quick fix or quick buck when longer-term dynamics are at play.
22. Not sure if this quote came before or after the Internet: “Let blockheads read what blockheads wrote.”
23. For those hoping to become famous and respected, he’s a testament that the challenges and doubts keep coming regardless of the length of the track record. He has publicly prevailed so far.
24. An investing truism: “Price is what you pay. Value is what you get.”
25. The business side of that investing truism: “Your premium brand had better be delivering something special, or it’s not going to get the business.”
26. He uses colorful language and analogies when drab jargon could do the trick.
27. Boring example: moat vs. competitive advantage.
28. Not-so-boring example: sex.
29. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
30. Classic line: “Only when the tide goes out do you discover who’s been swimming naked.”
31. He backs up his saying, “Our favorite holding period is forever,” by keeping past-their-prime subsidiaries that others would “spin off to unlock value.”
32. His Robin (Charlie Munger) can kick your Batman’s butt.
33. He makes loophole-free handshake deals.
34. “Risk comes from not knowing what you’re doing.”
35. Quote No. 1 on keeping it simple, stupid: “The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”
36. Quote No. 2 on keeping it simple, stupid: “There seems to be some perverse human characteristic that likes to make easy things difficult.”
37. The Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) annual meeting is an unrivaled spectacle in investing, truly living up to its billing as the Woodstock for Capitalists.
38. One of the most concise summations of why America is great: “There are 309 million people out there that are trying to improve their lot in life. And we’ve got a system that allows them to do it.”
39. Speaking of systems, he harnesses the power of some of the most well-conceived ones around.
40. Trash-bin-diving caution No. 1: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
41. Trash-bin-diving caution No. 2: “Time is the friend of the wonderful company, the enemy of the mediocre.”
42. He’s an eternal optimist in a sound-bite culture that often rewards pessimists.
43. His shareholder letters reveal an artisan-like craftsmanship only seen when the proprietor cares deeply about his creation.