Reflecting on Buffett’s farewell, lessons in humility and playing the long game.
I should be writing about the end of the government shutdown, which after 43 days finally resolved when eight moderate Democrats broke ranks and agreed to vote on legislation to fund the government even without any concessions from the White House. I should be poised with anticipation about the return of economic data, though at press time that still appears in question, at least for any of the missing data from this shutdown period. Or maybe I should be dissecting the earnings results from the likes of Advanced Micro Devices (AMD) that reaffirmed AI demand, while Disney stumbled as growth in streaming services was not enough to offset a decline in ad revenue from its legacy TV business.
But I won’t discuss those for now because something more important dropped this week that is worth reviewing. It was the last missive from Warren Buffett in the role of CEO, at the age of 95 years, of the wildly successful Berkshire Hathaway, as he passes the baton to his successor Greg Abel. There were so many wise and timeless lessons within it that are good reminders for all of us both in life and in investing. I will call out the four that stood out to me the most.
1. “Don’t beat yourself up over past mistakes—learn at least a little from them and move on. It is never too late to improve.”
Buffett was always very forthcoming about his errors. He was forthright about staying in investments too long, like the Dexter Shoe Company that he bought in 1993 for its low-cost U.S. manufacturing, only to have globalization edge out its advantage. Likewise, he was humble about missing opportunities, like the chance to invest early in Amazon and Google, something he passed on because he didn’t understand their business models. Buffett’s reminder that mistakes are how we learn and get better is a life lesson for us at any age and any stage. Being vulnerable and humble, and willing to learn is a key ingredient to enduring success.
2. “Get the right heroes and copy them.”
Buffett was heavily influenced by the legendary Benjamin Graham, a Columbia University Professor and author of The Intelligent Investor. As the father of value investing, Graham’s teachings so inspired Buffett that he enrolled in Columbia just to study under him. He then worked for him as an analyst at the Graham-Newman Corporation. He actually named his son Howard Graham Buffett after him. Graham’s principles of calculating intrinsic value, buying at a margin of safety and treating stocks as ownership stakes were integral to Buffett’s success leading Berkshire for 60 years.
In addition to Graham’s influence, Buffett also attributes much of his success to his relationship with his best friend and business partner, the late Charlie Munger. Together they stood firm in their commitment to owning a few high-quality businesses and holding them for the long haul. Together they built a conglomerate whose success is unrivaled for its endurance. And they had fun doing it together, in their classic unassuming, Omaha-born way. There was no competition between these friends; it was all respect and trust.
It is a good reminder that we choose the people we surround ourselves with, and we must choose wisely.
3. “Greatness does not come about through accumulating great amounts of money, great amounts of publicity or great power in government. When you help someone in any of thousands of ways, you help the world.”
Buffett’s point, and perhaps it is a pointed one this week when we learned that Tesla CEO Elon Musk was awarded a $1 trillion pay package to drive company goals, is that sometimes leadership is about empathy and fairness, not money. Buffett goes on to say that “kindness is costless but also priceless. Whether you are religious or not, it’s hard to beat The Golden Rule as a guide to behavior.” Buffett has long espoused that you build more successful, creative and loyal teams that help your business stand the test of time by leading with kindness, not fear. When you remember that “the cleaning lady is as much a human being as the Chairman,” you will never fail according to the Oracle of Omaha. It is a good reminder to all of us that returns come in a lot of different ways than just dollars and cents. Building something enduring, changing the world, investing according to your values, giving to loved ones and to your charitable causes, and holding to your standards might not mean you have the most dollars and cents, but that doesn’t mean you didn’t have the most success.
4. “Decide what you would like your obituary to say and live the life to deserve it.”
Buffett’s humble and honest life, his brilliant and disciplined approach to investing, and his epic philanthropy have inspired so many. Sometimes leaders and investors get so focused on short-term trends and goals, we lose sight of the long game. It feels even worse now in the constant spin cycle of news and tweets, especially with the formidable risks and challenges we face as a society. While it may seem a morbid thought to write your own obituary, the exercise of thinking about how you want to be remembered is an important one to take the emotion out of decisions, financial and otherwise, to find your real goals.
There will always be time to consider the ups and downs of financial markets, but this week let’s all take time to consider Buffett’s Thanksgiving letter as a call to action in thinking about our relationships, our lives and our legacies.
Written by a human.