Warren Buffett is fondly called the Oracle of Omaha, where he was born. At age 86, he ranks second among the richest people in the world with a net worth of $75.6 billion, behind only his good friend Bill Gates of Microsoft. Recently, HBO produced a documentary about the famed investor, and as a fan of what he has accomplished and his wisdom, I had to find a way to watch it. Of course, other than enjoying the film, I took notes and here are a few things I learned after watching “Becoming Warren Buffett.”
Live within your means
If we talk about living a simple lifestyle, Buffett will definitely be a great example. You might think that for someone of his stature, he’d be living in his mansion and probably would have a home in every state. But Buffett owns one house—the house he bought during the 1950s and it’s the only house he’s lived in since. One memorable scene for me was when he was buying breakfast on his way to work. His drive to work is highlighted by a daily drive-thru at McDonald’s. His choices are limited to just three, a $2.61 muffin, a $2.95 muffin or a $3.17 muffin. “The market’s down this morning so I think I’ll pass up on the $3.17 and go for the $2.95,” he quipped before picking up his order. That for me sums up Buffett’s unexpectedly simple billionaire life.
Do your due diligence when investing in stocks
Value investing is sometimes an abused phrase when investing in stocks. People think that when they buy a blue chip stock and intend to keep it for the long term even without any due diligence, they’re doing value investing.
That’s not how Buffett does it. Buffett loves to read and study. In the film, he mentions that he invests in companies within what he calls his Circle of Competence. He studies them, analyzes their financial statements before making any investment moves. His advice about stock investing—“If you are emotional about investment you’re not going to do well. You may have all these feelings about stock, but the stock does not have feelings about you”—many of us fail to heed.
Start young and continue learning
Buffett started learning about stock investing when he was 11. That’s also the time he made his first stock investment. From then on, he worked his way up to become an expert at it. Despite having great success with value investing, Buffett maintained his openness to learning something new and changed investment strategies as he grew older. What made him successful was buying “fair companies at great prices,” but what made him sustain the success he’s had was taking the advice of buying “great companies at fair prices” given by his good friend and partner Charlie Munger.
There’s more to investing than just making money. Though Buffett accumulated huge wealth through diligent investing, it wasn’t really all about the money for him. He had loads of money but never really engaged in lavish spending, nor did he know where to use them. For Buffett, he just loved what he did without really much regard about the money he was earning. It was not until his wife succumbed to a stroke did Buffett start getting into philanthropy, giving away $37 billion to charitable foundations. Since that day, Buffett, along with Bill Gates, has been donating billions of dollars to help those in need and help make life better for them. I think this just proves that in life, money is not the endgame, but purpose is.