Notes:
- This HBO documentary covers the life and work of Berkshire Hathaway Chairman & CEO Warren Buffett, largely through his own quotes.
- We also hear a lot from his business partner Charlie Munger and his first wife Suzie Buffett.
- Warren Buffett’s advice can teach us way more about life than just business.
- Most people call him a genius, but Buffett himself attributes almost all of his success to focus, luck, and consistency.
- I’m inspired by how he’s been able to perform at an elite level for 60+ years.
- Money is a scorecard for Buffett, but it doesn’t have much utility to him.
- He’s trying to give away 99%+ of what he earns back to society.
- Watch: Trailer, Video
Quotes:
On Life:
[Speaking to a group of high schoolers: “Let’s just imagine that when we finish, I’m going to let each one of you pick out the car of your choice. Sounds good, doesn’t it? [Laughs] Pick it out, any color, you name it. It’ll be tied up with a bow. And it will be at your house tomorrow.
And you say, “well, what’s the catch?” And the catch is, that’s the only car you’re going to get in your lifetime. Now what are you going to do know that’s the only car you’re going to have and you love that car? You’re going to take care of it like you cannot believe.
Now what I’d like to suggest, you’re not going to get only one car in your lifetime. But you’re going to get one body and one mind, and that’s all you’re going to get. And that body and mind feels terrific now, but it has to last you a lifetime.“]
“The world is a great movie to watch, but you don’t want to sleepwalk through life. The important thing to do is to look for the job you would take if you didn’t need a job and life is wonderful then. You’ll jump out of bed in the morning because you’re really looking forward to the day.”
“I have for over 60 years been able to tap-dance to work just ’cause I’m doing what I love doing. And I just feel very, very lucky.”
On Compounding:
“Einstein is reputed as saying that compound interest is the Eighth Wonder of the World… It goes back to that story you probably learned when you were in grade school: Somebody did something for the king and the king asked “what can I do for you?” He said, “let’s take a chess board, and put one kernel of wheat on the first square and then double it on the second and double in on the third. The king readily agreed it to it and by the time he figured out what 264 amounted to, he was giving away the entire kingdom.”
It’s a pretty simple concept, but over time it accomplishes extraordinary things.”
On Berkshire Hathaway:
“Berkshire is a holding company, of sorts. It owns a large number of separate businesses that operate independently of each other and to a great extent from the parent company Berkshire Hathaway.”
“We have maybe 70, maybe 80 businesses and we ask them to behave in a way that doesn’t hurt our reputation at Berkshire Hathaway. But they run their own lives.”
“Originally when I moved in in 1962… I went down to the South Omaha Library, and I think for a dollar, I got seven copies of old New York Times from big times like The Panic of 1907, this is a big one, 1929, obviously. But I wanted to put on the walls days of extreme panic in Wall Street. Just a reminder that anything can happen in this world. It’s instructive art.”
On His Childhood:
“I was born in 1930 here in Omaha, Nebraska, during the stock market crash. My dad lost his job in 1931 a year after I was born. He was a stock salesman, and he had what little savings he had in the bank and so he started his own company. He worked right through the Depression.”
“He didn’t care about money at all. He believed very much in having an internal scorecard. Never worry about what other people are thinking about you. Just you know why you’re doing what you’re doing. That’s enough.”
“She was very dutiful about taking care of the kids, but you didn’t get the same feeling of love. It was there, but it didn’t come out the same way it did with my dad.”
On His Early Education:
“I like numbers. It started before I could remember. It just felt good, working with numbers.”
“I liked to read more than most kids.”
“Very early, probably when I was seven or so, I took this book out of the Benson Library called A Thousand Ways to make $1000. And once of the ways was having penny weighing machines. And I sat and calculated how much it would cost to buy the first weighing machine and then how long it would take for that one to buy another one, sit there and create these compound interest tables to figure out how long it would take me to have a weighing machine for every person in the world.”
On His First Job:
“I think I enjoyed the game right from the start.”
“I liked being my own boss. That’s one thing I liked about delivering papers. I could arrange the route I wanted. Nobody was bothering me at five or six in the morning.”
“I was delivering 500 papers a day at a penny a paper. But in terms of compounding, that penny’s turned into something else.”
On Moving to DC:
“When I was about 12 or 13 we moved to Washington, my family. I was mad, I was having fun in Omaha. And I lost all my friends and now I moved to a town where they were all strange, so I was very very unhappy.
“At school, I just lost interest. I took pleasure in tormenting my teachers. At that time for example, AT&T was the stock that all teachers owned for their retirement. So I decided it would drive my teachers a little crazy if I were to short the stock… So I shorted 10 shares of AT&T and brought the confirmation to show the teachers that I was short the stock. They found me a big pain in the neck but they did think I knew a lot about stocks.”
Getting Rejected from HBS:
“I applied to Harvard Business School. They told me I was to get interviewed in a place near Chicago. I got there, and he interviewed for about ten minutes, and he said “forget it. You’re not going to Harvard.” And so now I’m thinking “what do I tell my dad? This is terrible.” And it turned out to be the best thing that ever happened to me.”
On Ben Graham:
“Ben [Graham] was this incredible teacher. He was a natural. And he drew us all in. It was like learning baseball from a fellow who was batting .400. It shaped my professional life.“
Ben’s Two Rules of Investing:
“Rule #1: Never lose money. Rule #2: Never forget Rule #1.”
On Becoming An Adult:
“When I got out of business school at Columbia, I’d developed pretty decent skills in terms of business. But I hadn’t come to terms with the world really.”
“There were two turning points in my life. Once when I came out of the womb and once when I met Suzie. She was the girl. But it took her a little longer to figure out I was the boy.“
On Dale Carnegie:
“I had been terrified of public speaking. I couldn’t do it, I’d throw up. And I knew if I didn’t cure it then, I’d never cure it. And so I saw an ad in the paper for the Dale Carnegie course, which worked on your ability to speak in public. And I went down there. They made us do all these crazy things to get out of ourselves, and so we stood on tables and did all kinds of things. If I hadn’t done that, my whole life would’ve been different.”
“So in my office, you will not see the degree I got from the University of Nebraska. You will not see the master’s degree I got from Columbia University. But you’ll see the little award certificate I got from the Dale Carnegie course.“
On Genetics and Luck:
“I was genetically blessed with a certain wiring that’s very useful in a highly-developed market system where there’s lots of chips on the table, and you know, I happen to be good at that game.”
“The truth is that I’m here in my position as a matter of luck. When I was born in 1930, the odds were probably 40:1 against me being born in the United States. I did win the ovarian lottery on that first day, and on top of that, I was male. Put that down as another 50/50 shot, and now the odds are 80:1 against being born a male in the United States, and it was enormously important in my whole life.”
Circle of Competence:
Ted Williams wrote a book called “The Science of Hitting” and in it he had a picture of himself at bat and the strike zone broken into, I think, 77 squares. And he said if he waited for a pitch that was really in his sweet spot, he would bat .400, and if he had to swing at something on the lower corner, he would probably bat .235.”
“In investing, I’m in a no-called strike business, which is the best business you can be in. I can look at a thousand different companies, and I don’t have to be right on every one of them, or even fifty of ’em. So I can pick the ball I want to hit. And the trick in investing is just to sit there and watch pitch after pitch go by, and wait for the one right in your sweet spot. And the people yelling, “swing, you bum!” Ignore them.”
“There’s a temptation for people to act far too frequently in stocks simply because they’re so liquid.”
“Over the years, you develop a lot of filters, and I do know what I call my circle of competence, so I stay within that circle, and i don’t worry about things outside that circle.
“Defining what your game is, where you’re going to have an edge, is enormously important.”
“I don’t have a mind that relates to the physical world well. But the business universe, I think I understand pretty well.”
Berkshire Hathaway’s Origin Story:
“I bought the first shares of Berkshire in 1962, and it was a northern textile business destined to become extinct eventually, and it was a statistically cheap stock in a terrible business. Berkshire Hathaway was closing mills, and as they closed mills, it would free up some capital, and then they would repurchase shares, so I bought some stock with the idea that there would be another tender offer at some point, and we would sell the stock at a modest profit. And at one point, the management asked me at what price we would tender our stock, and I said $11.50. And the tender offer came out a few months later, and it was $11 and 3/8ths, which was an eighth of a point cheaper. And that made me very mad, so I just started buying more stock. I just felt that I’d been double-crossed by the management. And in May of 1965, I bought enough so we controlled the company, and we changed the management.”
Charlie Munger: “It was a pretty silly way to behave, as Warren has recounted in retrospect. One of the reasons Warren is successful is he’s brutal at appraising his own past. He wants to identify misthinkings and avoid them in the future. But it was an accident that he chose Berkshire Hathaway. If the chairman hadn’t tried to cheat him out of an eighth, there wouldn’t have been any Buffett Berkshire-Hathaway history.”
“Looking back, it’s interesting, that tender offer, I didn’t realize it, but it happened about five days after my dad had died, and whether that had affected me or not, I don’t know.”
On Activism:
“I remember that speech that Martin Luther King gave, that was one of the most inspiring speeches I’ve ever heard. Took me right out of my seat. My wife was with me, and we both had the same experience. It was interesting. In that speech he talked about “Truth forever on the scaffold. Wrong forever on the throne. But that scaffold sways the future.” [originally a James Russell Lowell quote] Well he was going to be dead in six months. But that scaffold did sway the future.”
On Fathers:
[After teenage Warren ran away from home.] “My dad never really gave me hell about doing this. He said “you can do better than this.” And just saying that, I felt I was letting him down, basically. In all ways he was teaching me, never taught by telling me things, he just taught by example.“
“He had unlimited confidence in me, even when I screwed up. And that takes you a long, long way. The best gift I was ever given was to have the father I had when I was born.”
Charlie Munger: “Both Warren and I could look at our fathers and see what they did right and what they did wrong. Warren’s father was a real old-fashioned right-wing ideologue. And his father was so intense about it, that Warren just decided it was a mistake – it cabbaged up your head to be that much an ideologue, so he loved his father but he didn’t want to become a true believe in anything.”
On The Gender Gap:
“The initial example was really my mother. She came from a generation where the main function of the wife was to help her husband in the job. And my sisters are fully as smart as I am. They got better personalities than I had, but they got the message a million different ways that their future was limited, and I got the message that the sky is the limit. And it wasn’t due to a lack of love or anything of the sort. It was the culture.”
“On the other hand, you can look at the flip side of that and say it’s quite encouraging, because if you look at what this country accomplished only using half its talent, just think of the potential for the future. I’m enormously bullish on America over the future, and part of the reason is that we, by some rather stupid decisions, essentially put half our talent on the sidelines.“
Beyond Value Investing:
“If you’re emotional about investment, you’re not going to do well. You may have all these feelings about the stock. The stock has no feelings about you.”
Charlie Munger: “He made so much money for so long doing what he’d been taught by Ben Graham, which he’d buy these very cheap stocks. If they were cheap enough, he didn’t care it was a lousy company and a lousy management. He knew he was going to make money anyway, just because of the cheapness.”
“Charlie Munger has had a big impact on me in moving me towards looking for wonderful companies at fair prices instead of fair companies at wonderful prices.”
“That was enormously important, because it enabled Berkshire to scale up in a way that would have been impossible to do otherwise.”
On Moats:
“We have a company called See’s Candies out on the West Coast. See’s Candies Boxed Chocolates. If you give a box of See’s chocolates to your girlfriend on the first date and she kisses you? We own you. We can raise the price tomorrow and you’ll buy the same box. You’re not gonna fool around with success.
“So the key there is the response – you do know want to get home on Valentine’s Day and say to your wife, or your sweetheart, preferably they’re the same person, you don’t say “here honey, I took the low bid.” It doesn’t work. Price, to a degree, is immaterial.“
“If you’ve got an economic castle, people are going to want to come and take that castle away from you. You better have a strong moat. You better have a knight in the castle that knows what he’s doing.”
Modern Berkshire:
Charlie Munger: “I think the modern Berkshire is pretty much all a reflection of Warren.”
“I have constructed a business that fits me. It’s kind of crazy to spend your life painting if you’re painting a subject you don’t want to look at. I’ve gotten to paint my own painting in business, on an unlimited canvas in a way.”
“I work with a great group of people that make my life very easy and that take good care of me.
“We have 25 people in the office, and if you go back, it’s the exact same 25, the exact same ones.”
“We don’t have any committees at Berkshire. We don’t have a public relations department. We don’t have investor relations. We don’t have a general counsel. We don’t have a human relations department. We just don’t go for anything that people do just as a matter of form.“
“It’s exactly the life I like, and it’s not work to me. It’s just a form of play, basically.”
On Focus:
“I probably still spend five or six hours a day reading.”
“Shortly after I met Bill Gates, Bill’s dad asked us both to write down one word that would best describe what had helped us the most. Bill and I, without any collaboration at all, each wrote the word “focus.”
“Focus has always been a strong part of my personality. If I get interesting in something, I get really interested.”
On Big Problems:
“I I like to sit and think, and I spend a lot of time doing that. And sometimes it’s pretty unproductive but I find it enjoyable to think about business or investment problems. They’re easy. It’s the human problems that are the tough ones. Sometimes there aren’t any good answers with human problems. There’s almost always a good answer with money.“
On the Salomon Scandal:
“It’s takes 20 minutes to make a reputation, then it takes five minutes to lose it.”
“The company owed $150 billion. It owed more money than any other private country in the United States at the time.”
“I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper to be read by their spouses, children, and friends. If they follow this test, they need not fear my other message to them:
Lose money for the firm, and I will be understanding. Lose a shred a reputation for the firm, and I will be ruthless.“
On Berkshire’s Annual Meetings:
Charlie Munger: “We used to have just 30 people in a cafeteria, and now we have this huge public spectacle.”
Charlie Munger: “Celebration is part of making a group of people work well together. It’s a celebration.”
“At Berkshire, everybody gets the same information from the comprehensive annual report We don’t meet with the analysts. I’m not interested in what an analyst thinks about Berkshire, I’m interested in what the owners of Berkshire think about Berkshire.“
Charlie Munger: “He came out of a private partnership where people he knew were trusting him. And he had his relatives in the partnership, and they were not rich. And as it got bigger, he started treating everybody else the way he treated his relatives.“
“In terms of our feeling towards the people who are shareholders, we regard them as our partners. They’re not some faceless group of people. And that’s why at the annual meeting, I love seeing 40,000 of them. It gives real meaning to what we’re doing every day.”
How to Make the Next Berkshire Hathaway:
Charlie Munger: “I’ll tell you how you do it. You ever see a juggler juggle 25 milk bottles? How did he ever get to do that? The answer is he started with one bottle, then two, then three, and just kept doing it, and pretty soon he was at 25. And that’s the way we did it.”
Charlie Munger: “We started out with cash and ended up buying a bunch of businesses.”
On Being #1:
Reporter: “What you think back 50 years ago, when you founded this company, did you ever imagine it would be the fifth-largest company in the world?
Warren Buffett: “No I didn’t, but if I was thinking about it, I wouldn’t have thought in terms of being the fifth, or the fourth, or the third.
Reporter: “You would’ve wanted to be number one.”
Warren Buffett: “I mean, if you’re going to dream, you might as well dream.”
On Time:
“It’s been 50 years since I formally took control of Berkshire Hathaway, and, step by step, we’ve created something that is kind of what I dreamt we might create over time, but it took a long time to do it.”
“Never seemed like we were making that much progress on any one day, but compound interest works.”
“Over the years, I’ve developed a better understanding of human nature. I can learn a lot about investments out of a book, but I don’t think you can learn as much about human beings. You really need some experiences, and I’m wiser in that respect than I was 40 or 50 years ago.”
On Love:
“It’s a very strange thing, love. You can’t get rid of it. If you try to give it out, you get more back. If you try to hang on to it, you lose it.”
On Relationships:
“The worst mistakes involve not understanding other people as well as you might.”
The biggest thing in money is time. You don’t have to be particularly smart, you just have to be patient. Suzie didn’t want to wait as much as I did, but she never quite appreciated compounding like I did.”
“Well she left Omaha in 1977, and there really isn’t much to say about that.”
‘Suzie and I loved each other, we admired each other, and we were totally in sync with what the other was doing, but we were two different individuals.”
“Suzie really put me together. She believed in me. She put me together. And I would not only have turned out to be the person I turned out to be, but I would not have been as successful in business without that, she made me more of a whole person.”
“Well, Astrid has lived with me a long time. She’s done wonders for me. It worked well, but I don’t think it’ll work well for lots of other people necessarily.”
On Charity:
“It didn’t make a difference what we were going to do with the money after we made it. I thought I would pile it up over the years, then she would unpile it in terms of running one very large foundation. And I was particularly good at compounding money, and therefore society would benefit by waiting.”
“My wife Suzie and I had planned that whatever I made would go back to society, and, originally, I thought she would outlive me and she’d make the big decision. But since her death, I had to rethink the best way to get the money into society and have it used in the most effective way, and I had a solution staring me in the face [The Gates Foundation].”
“I feel terrific about the fact that my three children each run a separate foundation that combines their special interests.”
“In my entire lifetime, everything that I’ve spent will be quite a bit less than one percent of everything I’ve made. The other 99% plus will go to others, because it has no utility to me.”
On Death:
Director: “Do you fear death?”
Warren Buffett: “No, I don’t. I’ve had a terrific life. I feel it’s gonna happen, and I have no idea what happens after it. I’m an agnostic, so it may be terribly interesting. It may not be interesting at all. We’ll find out.”
“But it really doesn’t make a difference at all. It doesn’t interfere with my work. It doesn’t interfere with my happiness. It doesn’t interfere with my thinking.
“The game that I’m in gets more interesting all the time. It’s a competitive game, it’s a big game, and I enjoyed the game a lot.”