The author of “Richer, Wiser, Happier” explains the 3 key traits of Warren Buffett
- Warren Buffett’s success is in part due to his adherence to three key ideas.
- The billionaire investor’s lifestyle, restraint and focus on capitalization all helped him.
- “Richer, Wiser, Happier” author William Green explained why in an interview.
Warren Buffett, billionaire investor and CEO of Berkshire Hathaway, embraced three key ideas that sharpened his focus, kept him out of trouble, and inflated his returns for many decades.
William Green, author of “Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life,” explained these key principles in a recent interview with Insider.
Together for success
Buffett knows the value of lifelong learning, minimal distractions, and independent thinking. Keeping a light schedule, spending most of the time alone in his office, and working away from Wall Street in Omaha helps on all three fronts.
“He’s built his life in a way where he’s sitting quietly, reading annual reports, chatting on the phone and very occasionally making a bet when the odds are in his favor,” Green said. Many other large investors have structured their physical and emotional environments in the same way, he added.
Buffett and his business partner, Charlie Munger, distance themselves from the outside world because it helps them ignore criticism, group thinking and the pressure to act. Instead, they can focus on making high-quality, long-term decisions.
“Buffett and Munger embody this way of approaching the world where you don’t get paid for the activity, you get paid to be right,” Green said.
Stick to your guns
Buffett tries to stay in his circle of skills, only investing in things he understands. This forces him to turn down many opportunities.
“When the crowd wants Buffett to buy crypto and be fully invested in stocks to ride that market, he has the ability to say, ‘No, I’m not doing that. I don’t play this game. I exercise discipline. and buy companies that will experience strong growth over time, ”Green said.
Buffett isn’t tempted by the latest fashions in the market and isn’t desperate to buy every drop as he is focused on securing the prosperity of his business for decades to come.
“Buffett made Berkshire Hathaway the last man standing,” Green said. “This discipline, restraint, patience and selectivity are really a key aspect of her survival and long-term success.”
The investor also knows that many people have entrusted their savings to him and he takes this responsibility seriously.
“So many Berkshire Hathaway shareholders have pretty much all of their net worth in it, so he’s just not going to take reckless risks with their money,” Green said.
Complement the money and kindness
Buffett knows money breeds money, so he doesn’t want Berkshire to lose everything and miss future returns.
“The point isn’t to get the ball out of the park in the short term, it’s to stay in the game,” said Green. Buffett hasn’t made any catastrophic mistakes in his career, which means Berkshire has been able to “harness the power of composing without catastrophe” for several decades now, he continued.
Buffett applies a similar concept to his personal life. He behaves in a kind, honorable and decent manner to attract high quality people into his orbit and make others want to do business with him – an approach that investors such as Guy Spier and Mohnish Pabrai describe as “a aggravating goodwill, ”Green said. .
For example, Buffett wrote to Spier a few years ago to tell him that he had read the fund manager’s annual report and wanted to congratulate him on his great job, the author said.
“There’s nothing Buffett can take away from that, it’s just a pure act of kindness,” Green said. “You know Buffett does this left, right, and center. He’s tapped into that universal truth of compound goodwill, and it becomes a competitive advantage.”