Powerful lessons for living a happy life and growing a successful business.
On Saturday, May 7, Warren Buffett and Charlie Munger held their annual meeting of Berkshire Hathaway shareholders. For five hours, the legendary pair shared their wisdom about investing for the future, living a good life, and growing a successful business.
“There’s nothing like working for yourself,” Buffett said. While Buffett and Munger relish the freedom and flexibility they’ve enjoyed for nearly 60 years, they’ve also learned plenty of lessons they were eager to share with 40,000 shareholders at Saturday’s meeting.
1. Leave emotion out of it.
“I can’t recall any time in the history of Berkshire that we made an emotional decision,” Buffett said.
Regulating emotions is a consistent theme in Buffett’s life. It serves as the foundation for one of his most famous quotes: “Be fearful when others are greedy and greedy when others are fearful.”
Buffett believes that even intelligent people are easily rattled by scary headlines and “breathless commentary.” And those emotions–especially fear–are very contagious, Buffett warns.
“You don’t want to be a no-emotion person in every aspect of your life,” Buffett adds. “But you definitely want to keep emotions out of investing or business decisions.”
2. Pay attention to consumer behavior.
While Buffett says founders should leave emotions out of their investing or business decisions, he’s constantly watching how people act because he knows that emotions drive behavior.
For example, Buffett made headlines this weekend when he said that Apple is the best business in Berkshire’s entire portfolio of companies. But dig a little deeper into his statement, and you’ll see why he’s been accumulating shares in the company. According to Buffett, “a person will spend $1,200 on an iPhone and $35,000 on a second car, but if you ask them to give up the second car or their iPhone, they’ll give up their second car.”
Buffett added, “I don’t understand the phone at all, but I do understand consumer behavior.”
3. Read a ton of books.
Buffett praised The Intelligent Investor, a book written in 1949 by his mentor, Benjamin Graham. “That little book that changed my life,” he said.
Buffett’s reading habits are well known (he famously reads six hours a day). But at this year’s conference, Buffett and Munger stressed that, even at the ages of 92 and 99, they have much more to learn. “We’re learning all the time. We don’t get smarter over time; we get a little wiser,” Buffett said.
4. Invest in yourself.
Buffett turned the table on someone who asked him for the best investments to protect against inflation. Buffett said, “Your best defense against inflation is your own earning power. If you’re the best doctor in town, the best lawyer, the best teacher–or even the 10th best–you’ll make a good living. You will succeed with your talents. The best investment is always in yourself.”
Reading books, taking online classes, and learning new skills are all part of what Buffett considers investing in yourself. If you stand out from the competition, you’ll be rewarded when the economy is good–and bad.
5. Reverse engineer your life.
Buffett says if you want to live an extraordinary life, “write your obituary and then try to figure out how to live up to it.”
Buffett believes that growing a business that succeeds over the long run begins with the small daily steps that founders take to turn their vision into reality. You’re never too young to think about what you want people to say about you or your business decades in the future.
6. Surround yourself with people who are smarter than you.
Buffett took the opportunity to lavishly praise Ajit Jain, the executive who runs all of Berkshire’s massive insurance businesses.
“He [Jain] had absolutely zero experience in insurance,” Buffett recalled about their first meeting in 1986. Despite Jain’s lack of experience in insurance, Buffett was impressed with Jain’s intellect. “I knew I had struck gold,” Buffett said.
“I can’t think of any decision Ajit’s ever made that I think I could have made better,” Buffett added. That’s high praise when you consider that Buffett hired Jain 37 years ago.
While hiring people who are smarter than you makes sense, most people can’t stand the idea. And that’s why Buffett’s advice will set you apart. Set aside your ego and surround yourself with people who will lift you higher.
7. Be kind.
Buffett reminds everyone–especially business owners–to treat everyone with kindness. It’ll pay off with employees, investors, stakeholders, and customers over the long run.
“I’ve known plenty of people with money who have died without friends,” Buffett said. “But I’ve never known anyone who was kind who died without friends.”