This is undoubtedly one of my favorite videos on Warren Buffett. I have blogged about this lecture before, but I thought that the content was so amazing, that I had to break it up into pieces and really delve into the words of wisdom he imparts to these students so that we can all learn from it. I have listened to this many times, and now, I really pay attention to what he says so that I can reinforce my investment principles in this difficult, but exciting economic environment. I say exciting because this is a time where great investment opportunities can be found, as Warren indicated in his Op-Ed article in The New York Times. See my blog on this article; Buy American, I am.
So this lecture from the University of North Carolina in 1996 is divided into 6 parts. Therefore, for this series I will highlight the main content of the particular segment and allow you to pay attention to the videos to build your own knowledge on investing.
I will begin with part 1, where he talks about his involvement with Salomon Brothers in resolving some management issues and running the company. He was brought in to replace the current management and prevent the company from running into the ground. Therefore, he had to find someone who was qualified enough to run the company, that is, dealing with daily operations and making complex business decisions, since he would be preoccupied with regulators and such. He then gets into what was important for the students to know.
He met with 12 people, only knowing 4 of them by sight to interview for the position. This is what he looked at when considering.
He was not concerned about their grades in business school or even if they went to business school at all. He did not ask for their resumes; it did not make any difference. He knew they all had the I.Q. that was necessary to handle the job. He knew that they all were intelligent enough for the position because they could not have gotten to where they were without the understanding of the markets and how financial instruments work and so forth. He wanted to know how their machinery works. He says you can tell the people who are very full of themselves. You can detect the ones that would not have the courage in a difficult situation. He wanted people who were always willing to give others credit, or who wouldn't cut corners and who deliver all they promise and a little extra.
Warren Buffett continues to speak about the character and work ethic of the guy he hired for the position. Listen and tell me what you think about this section.
He then relays a story he always gives to students.
"If you looked under your seat today and one of you had this lucky ticket and the one with the lucky ticket got to pick one of your classmates. You had to pick one classmate and you had an hour to make the decision. You would then get 10% of the earnings of this classmate for the rest of his/her life. What would you think about in that hour? Would you think about the I.Q., the grades, who was the best looking? Probably not. A lot of things will go through your mind and you will be amazed about how you all will settle on relatively few individuals. You are not thinking about things that are impossible for you to achieve yourself. You are not thinking about who can jump seven feet, who can through a football 65 yards, who can recite Pi to 700 digits. You are thinking about a whole lot of qualities of character. The truth is, every one of those qualities is attainable. They are largely a matter of habit."
He mentioned that his old boss, Benjamin Graham, wrote down qualities that he admired in other people and qualities he found objectionable. He realized that none of the qualities he liked were not attainable. It was a matter of exhibiting those behaviors and not exhibiting the behaviors that he disliked. Warren Buffett says that this is easier to do when you are young, so he encourages the students to do so.
He ends with the following quote:
"Chains of habit are too light to be felt until they are too heavy to be broken."
End of Part 1
I decided to list some of the behaviors I admire and others I choose not to exhibit. What are some of yours? Feel free to drop a comment about them.
Behaviors I admire:
Behaviors I dislike: