In this post you’ll find a few of the most valuable life and business lessons I learned from Warren Buffet.
When the subject is business and investing, the name that often pops up in the minds of the majority is Warren Buffet. He certainly earned his share of public respect and admiration with his success, and It’s no wonder that even tough he’s not a Hollywood star nor a famous musician he still has a large number of followers eager to learn what he did to become so successful. Below are a few lessons I learned from Warren Buffet.
Lessons I learned from Warren Buffet
1. Invest on what you understand
Warren Buffet is known for his avoidance of technology businesses, for the simple reason that he admits that he doesn’t understand them. We tend to believe that the best of investors and businessman/woman are the ones who have a grasp on the intricacies of every business imaginable. The truth is that there is no such person who is master of all. There are the ones who nominate themselves as Jacks of all trades, but in order for one to exert some measurable impact on any area, one has to, according to the book outliers by Malcom Gladwell have an accumulation of at least 10,000 hours of deliberate practice. If we were able to live forever, maybe there would be such a thing as mastery across many different fields, but since we’re not, this remains a dream.
The circle of competence
The idea of the circle of competence is an extension of the point above. Warren Buffet often says on interviews that one of the secrets for his wild success is the fact that he is aware of what he knows and doesn’t, and he spends his time on what he knows. His circle of competence. With success, it’s easy to assume that we can do anything and that we don’t have any weaknesses. Warren Buffet understands this is a recipe for disaster, and maybe is the reason why he has been successful on what he does for so long.
2. Invest on businesses that will be around today, tomorrow and decades from now
Another piece of wisdom I learned from Warren Buffet was to think about and invest on businesses that have the potential to stay around for a very long time. The reason for this is that unlike day traders, his goal is to buy and hold businesses for a long time and if possible forever. This can only happen if the business you buy/start/invest on has the power to deliver value or remain valuable for the decades to come. Examples are included Coca-Cola and Colgate, which no matter how much the world around us changes, will still have people interested on their products.
This is a good advice not only for investors but also for the ones who want to start their own business. If the business you want to start makes part of the set of businesses that will run out of demand as the culture of the entire planet changes and technology evolves, then this is a sign that it might be the wrong business to start in the first place.
3. Take the job that you would take if you’re wealthy
This is directed to the ones who are not sure about what to do in the future. The idea that in order to be truly successful one has to follow his passion has been pressed upon for ages, but still today, we see most people taking jobs based on how much money they can make from it. Warren Buffet is known to say that he “Tap dances” to work, meaning that unlike the majority, he loves what he does. It is only by enjoying what you do that you can give yourself the time to master the small and sometimes tedious aspects of your trade.
One way to find your passion is, according to Warren Buffet, to ask yourself what kind of job you would take if money wasn’t a problem.
4. Hire well
This tip goes for the ones who are planning to or already have a business.
It is not to have a great product for the market if the people behind it are of low quality. Businesses like Google and Amazon spend lots of time and money tweaking their interview strategies in order to make sure they find the right people. According to Warren Buffet the right people you should hire usually have most of if not all of the 3 following characteristics: Integrity, intelligence and energy, zeroing in on the first one.
When it comes to interviewing, one of the most looked for traits by employees is intelligence. Although it might be a good parameter to predict the potential for high performance of the employee at work, intelligence can’t predict neither the level of integrity of the person nor it’s level of energy. So, instead of taking IQ tests or resumes as the one thing that you use to find the best employees, you should also include integrity and energy to your list of parameters.
5. Read
When it comes to finding the one thing that most of if not all of the widely successful have in common, the one thing that comes up over and over again on interviews is reading; And Warrern Buffet is no different. As obvious as it might sound for the majority, knowledge is what in the end of the day, will tell whether you’re ready to take the opportunities that life randomly throws at you. While at a young age, Warren Buffet created the habit of reading books about investing and before his adulthood he got to finish all the books about investing that the local library was able to provide.
With an increased level of knowledge also comes an increased ability to solve problems as well as a greater readiness to opportunities and for this, books are probably your best friends.
It is all about knowledge and experience 😉
Leave a comment below