Warren Buffett MBA Talk | Part 10: Ovarian Lottery

"Do something you enjoy all your life and be associated with people you love"

Warren Buffett concludes this talk with the most important story that he refers to as the Ovarian Lottery. I believe this to be a great way to look at the society and your role in this world. I will do my best to transcribe the story so that it is clear and so that it impacts you as much as it did me. Enjoy.

The Ovarian Lottery

Twenty-four hours before you were born, a genie came to you.


Genie: "Herb, you look very promising and I have to design a world in which you are going to live and I have decided to allow you to design it because it is too difficult of a task. So you have 24 hours; you have to figure out what the social rule should be, the economic rule , the governmental rules and you are going to live under those. Your kids will live under them, and their kids will as well."


You: "I can design anything?"


Genie: "Yes, you can do it."


You: "There must be a catch."


Genie: "Well there is a catch. You don't know whether you are going to be born black or white, rich or poor, male or female, weak or able-bodied, bright or retarded. All you know is that you are going to take one ball out of a barrel that contains 5.8 billion. You are going to participate in what I call the Ovarian Lottery. You are going to get one ball out of there and that will be the most important thing to happen to you in your life because that will control whether you are born with an I.Q. of 130 or and I.Q. of 70. It's going to determine a whole lot. And you are going to go out in that world and have a ball. What kind of world do you want to design."

Buffett says:

This is a good way to look at social questions because not knowing which ball you are going to get, you will want one [a world] that produces a lot of goods and services because you're going to want people on balance to live with. You will want it to produce more and more so that your kids will live better than you and their kids better than your kids.

And you will want a system, if it produces lots of goods and services, it does not leave behind a person accidentally got the wrong ball and is not well wired for this particular system.

I'm ideally wired for this system. I fell into here. I came out and I have something that allows me to allocate capital. Nothing's so wonderful about that. If all of us were stranded on a desert island. We all landed there and were never going to get off, the most valuable person would be the one that could raise the most rice over time. Bill Gates said that if I had been born a few years ago, I would have been some animal's lunch. You can't run very fast, you can't climb trees, you can't do anything. I'd just be chewed up on the 1st day. You were lucky to be born today.

Here's the question to ask yourself. Here is this barrel of 5.8 billion balls. If you could put your ball back and then take out, at random, 100 other balls and you had to pick one of those, would you put your ball back in? Your answer is most likely no, because you are in the luckiest 1% of the world by just being here right now.

Out of those100 balls that you get out, roughly 5 of them would be American. 50% would be men and women, 50% would be intelligent.  So what you are saying is that you are in the top 1% of the world.

Investing Philosophy

In this final clip of the MBA talk, Warren Buffett endorses probably the best book ever written about investing; The Intelligent Investor by Benjamin Graham. He refers to the two most important chapters in the book that framed the foundations of his investment philosophy; Chapter 8 - discusses Mr. Market; how one should view the market as a bipolar, manic-depressive individual that gives you a good deal on one day, and a bad deal the next and is totally irrational; Chapter 20 - discusses the idea of 'Margin of Safety', that Buffett says are the three most important words in investing, and still applies today. As always, a great way to end this MBA talk series. If you are new to investing, this is probably the best book to start off with.

See Buffettucation Bookstore to the right for the list of books.

Life Philosophy

The Ovarian Lottery provides the greatest lessons one can learn from life on this planet; compassion for others, humility for one's gifts, and gratitude for the life one was given. I think it really speaks for itself. It reminds me of the famous quote by Mahatma Ghandi; "Be the change you want to see in the world". In a sense, let your ideas of how you think the world should be, be applicable to everyone. A fair and just world that supports others that have drawn the short straws in life, and supports those that strive to make the world a better place.

Now that we have completed the MBA talk, I hope you got to learn a little bit about Warren Buffett's investing and life philosophy, I hope this will get you interested in his work. Most importantly, I hope it is the beginning of a great investment career for you. Keep reading and keep learning.

Related Posts
Warren Buffett MBA Talk | Part 1: Integrity
Warren Buffett MBA Talk | Part 2: Smart Choices
Warren Buffett MBA Talk | Part 3: Choosing Businesses
Warren Buffett MBA Talk | Part 4: Share of Mind
Warren Buffett MBA Talk | Part 5: Circle of Competence
Warren Buffett MBA Talk | Part 6: Macroeconomic Factors
Warren Buffett MBA Talk | Part 7: Inactivity & Dividends
Warren Buffett MBA Talk | Part 8: Diversification
Warren Buffett MBA Talk | Part 9: Market Cap
Warren Buffett MBA Talk | Part 10: Ovarian Lottery


1 Response to "Warren Buffett MBA Talk | Part 10: Ovarian Lottery"

Unknown said... January 5, 2009 at 1:01 AM

After reading the MBA talk series by Warren Buffet, I'm preparing to be a great investor. I'm tired of limiting myself to the status quo. I plan to to read, study and start learning about businesses the way Buffet does as well as the way other notable value stock investors does. The MBA talk series has given me a new perception and perspective not only in investing but also in life. Buffet is the man. But God and my savior Jesus is ultimately the MAN. Thank you Lord for knowledge!

Post a Comment


Sponsored Links

Recommended Readings