Inspiration from Warren Buffet
Estimated Lesson Time: 3 minutes
Warren Buffet (1930–) is known as perhaps the greatest investor ever to live. He became the world’s richest person by sticking to common sense principles in stock market investing.
Success has much to do with aptitude. Warren displayed an amazing aptitude for money and business at a very early age. At age 6, Warren bought six-packs of soda for 25 cents and resold the cans individually for 5 cents each, making a respectable 20 percent profit.
Success is learning patience. At eleven years old, Warren purchased three shares of Cities Service Preferred at $38 per share, which quickly dropped to $27 per share. Although he was an emotional wreck, he held on to the stock until it rebounded to $40 per share, at which time he quickly sold. The stock then shot up to $200 per share and Warren learned early the importance of patience.
Success is realizing the insignificance of rejection. When Warren was persuaded to apply to Harvard Business School, he was rejected because he was “too young.” Warren then applied to Columbia where famed investors Ben Graham and David Dodd taught—an experience that would forever change his life.
Success is overcoming your fears. Warren knew the importance of public speaking; however, he admitted to having an “intense fear” of it. Instead of fearing it, Warren decided to do something about it. He enrolled in Dale Carnegie’s public speaking course and conquered his fear.
Success is learning from your work. One of Warren’s mentors, a respected investor, offered Warren a job, which he accepted. During this time of employment, Warren learned what he needed to know about investing to become a stock market billionaire.
Success is having goals. Since 1957, Mr. Buffet has far exceeded his initial goal of beating the Dow Jones Industrial Average by 10%.
Success is creatively negotiating. When making Ken Close president of one of his companies, he felt that it would be unfair to the stockholders to award Mr. Close a stock option, on which Mr. Close insisted. Instead, Buffet proposed to co-sign an $18,000 loan that Mr. Close then used to buy his own stocks. Mr. Buffet created a win-win situation.
Success is sticking with what works. When asked by a friend why he doesn’t invest in real estate, Warren replied, “Why should I buy real estate when the stock market is so easy?”
Success is believing in yourself even when the facts are against you. Warren Buffet’s philosophy is and always has been to allocate capital into great businesses that are selling below intrinsic value. However, with the Internet boom, his firm was making very nominal gains while other investment firms were making their clients millionaires. Buffet’s clients, and the media began to believe Buffet had lost his touch. As Buffet expected, the market did eventually correct itself, and while millions of “on paper” millionaires lost everything virtually overnight, Buffet’s clients remained wealthy.
[Sources: http://www.surferess.com, http://www.askmen.com]
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Some discussion questions (some may not apply to this lesson):
- Have you implemented this idea in your life? How has it been working for you?
- Do you have any interesting stories related to this lesson? Do tell!
- What do you admire most about this person? (success biography days)