Search CDOQ

Sunday, September 6, 2009

Warren Buffett and the Business of Life

I just finished listening to an audio book - The Snowball: Warren Buffett and the Business of Life. It is a biography of Warren Buffet who is one of my heroes. The audio book is 37 hour long and is very addictive. I could not stop listening to the audio book until it was finished.

Buffett is an extraordinary human being. One learns a lot from his biography. However, since I usually don't listen to audio books, I don't remember most of what I heard:-) after being in awe for 37 hours. Following are a few random things I remember:

1. Buffett never acquired a company with a hostile takeover.

2. One should always have "margin of safety" when making investments. What that means is that one should not make investments where there is a risk of losing money if things don't go according to the plan.

3. It is not a good idea to be on company boards where one doesn't have any influence on the CEO.

4. Praise the individual and criticize the category. Buffett followed Dale Carnegie principles for human relations.

5. Charlie Munger played a critical role in changing how Buffett thought about investments.

6. Time is the friend of the wonderful business, the enemy of the mediocre.

7. Allies are essential.

8. Commitments are so sacred that by nature they should be rare.

9. Grandstanding rarely gets anything done.

10. One should think independently.

11. Work for people you admire and do business with people you like.

12. Protect your reputation at any cost.

13. The best way to solve a problem is to invert. For example, if you want to buy something think about why the other party is selling.

14. Society plays a big role in one's success. If Bill Gates were born in Bangladesh, he would not have been successful. Buffett calls being born in the right society which gives you opportunities to succeed as winning the ovary lottery.

15. 2008 was not the first time when the government help bail out private banks. The fed intervened to bail out LTCM in 1998.

16. Be fearful when others are greedy, be greedy when others are fearful.

17. History does not tell you the future.

18. Doing a job just because it looks good on your resume is like saving sex for old age. Do a job that you like.

19. When you are buying a stock, you are buying a piece of the business.

20. The most important factor that made Buffett successful is Focus. And, Bill Gates has the same opinion about the importance of Focus.

21. Stay within your circle of competence when making decisions.

22. Invest in business which have Sustainable Competitive Advantage or a "moat" around them.

This is in no way the complete list. Just a teaser to encourage you to read the book:-)