The Bledsoe Firm - July 2019

The Bledsoe Firm | 949.363.5551 July | 2019

A L asting L egacy Warren Buffett’s Greatest Lesson

At 88 years old, many of Warren Buffett’s habits are set in stone. He maintains these practices because they work for him. It’s widely known that Buffett spends most of his day with his nose buried in a newspaper or book, so he’s always learning. Buffett drives to the same McDonalds every morning to get his breakfast, and he never spends more than $3.17. When he rolls up to the pay window, he pays with exact change. His habits also extend to the manner in which he invests. Back in 1999, Buffett traveled to Sun Valley, Idaho, for an annual conference of multimillionaires and billionaires. The event is for CEOs, business leaders, celebrities, and the tech elite. At this particular conference, he was surrounded by tech people who were riding high on the dot-com craze. Buffett found himself in company with newly-minted millionaires, but he wasn’t impressed. At the end of the week, Buffet gave the keynote speech telling the audience in effect that there was little substantial or real value behind their businesses. To illustrate his point, Buffett handed out jewelers’ loupes and asked those in the audience to examine the diamonds in the jewelry of those sitting around them. It was his way to drive the point home that often something that looks impressive or to be of great worth may in reality be not live up to its appearance — at least in the context of the tech boom. It’s safe to say Buffett didn’t make many new friends that week. Of course, in hindsight, a lot of people probably wished they had listened, because Buffett’s investing habits are exactly what made him a billionaire. He

invests in businesses that have true economic substance and can back up the goods or services they are selling. While he wasn’t convinced to buy tech stocks in 1999, he did eventually come around.

In 2016, Buffett made his initial investment into Apple, saying he liked the way the company conducted

business. He even said Apple would become the first trillion-dollar company, which did come to pass in 2018. It may have taken him several years to make the leap into tech, but it worked out, and his deliberation paid off. Buffett has also become known for his philanthropy, making it a habit to give away his fortune. In fact, he has no intention of leaving behind his wealth for his children and heirs. He has helped out his children somewhat over the years, but they are largely successful in their own rights. Today, Buffett is steadily reducing his wealth by donating money to causes he cares about. He’s even partnered with Bill Gates in this endeavor — another billionaire who’s a believer that his children should not be left with an overabundance of money, not when that money can be used for good right now. Will there ever be another Warren Buffett? Probably not. But he isn’t shy about sharing his secrets to success. A teenager once asked him what advice he could give a young person about how to be successful. Here’s Buffett’s response: “It's better to hang out with people better than you. Pick out associates whose behavior is better than yours, and you'll drift in that direction.” In other words, spent time with those who have more integrity, and your tendencies will improve. Buffett is a huge believer in integrity. In fact, he says you should never hire someone who lacks that crucial quality. To that point, he says to hire based on intelligence, energy, and integrity. But if the person doesn’t have integrity, the other two points won’t matter.

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