Simplicity Pays :: Warren Buffet [ The Second Richest Man Of The World ]

Warren Edward Buffett (born August 30, 1930) is an American investor and the CEO of Berkshire Hathaway.
Warren Buffet :: Simply Secong Richest Man Of The World.

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Some Interesting Facts About Warren Buffet
1) He bought his first share at age 11 and he now regrets that he started too late !

2) He bought a small farm at age 14 with savings from delivering newspapers.

3) He still lives in the same small 3 bedroom house in mid-town Omaha, that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.

4) He drives his own car everywhere and does not have a driver or security people around him.

5) He never travels by private jet, although he owns the world's largest private jet company.

6) His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis.

7) He has given his CEO's only two rules.
Rule number 1: do not lose any of your share holder's money.
Rule number 2: Do not forget rule number 1.

8) He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch television.

9) Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.

10) Warren Buffet does not carry a cell phone, nor has a computer on his desk.

11) His advice to young people: Stay away from credit cards and invest in yourself.


Video Interview Of Warren Buffet The Man:

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Qutoes From Warren Buffet: The Second Richest Man Of The World, Yet So Simple

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• "The line separating
  
  investment and
  
  speculation, which is never bright and clear, becomes blurred still
  further when most market participants have recently enjoyed triumphs. Nothing
  sedates rationality like large doses of effortless money. After a heady
  experience of that kind, normally sensible people drift into behavior akin to
  that of Cinderella at the ball. They know that overstaying the festivities --
  that is, continuing to speculate in companies that have gigantic valuations
  relative to the cash they are likely to generate in the future -- will
  eventually bring on pumpkins and mice. But they nevertheless hate to miss a
  single minute of what is one helluva party. Therefore, the giddy participants
  all plan to leave just seconds before midnight. There’s a problem, though:
  They are dancing in a room in which the clocks have no hands."
  
  
  
  • Berkshire Hathaway
    
    2000 Chairman's Letter
  
  
  
  

• "Long ago,
  
  Sir Isaac Newton gave us three laws of motion, which were the work of
  genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle
  in the
  
  South Sea Bubble, explaining later, 'I can calculate the movement of the
  stars, but not the madness of men.' If he had not been traumatized by this
  loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion:
  For investors as a whole, returns decrease as motion increases."
  
  
  
  • Berkshire Hathaway
    
    2005 Chairman's Letter
  
  
  
  

• "[The perfect amount of money to leave children is]
  enough money so that they would feel they could do anything, but not so much
  that they could do nothing."
  
  
  
  • Richard I. Kirkland Jr.,
    
    "Should You Leave It All to the Children?", Fortune, 29 September
    1986.
  
  
  
  

• "If I was running $1 million today, or $10 million
  for that matter, I'd be fully invested. Anyone who says that size does not
  hurt investment performance is selling. The highest rates of return I've ever
  achieved were in the 1950s. I killed the Dow. You ought to see the numbers.
  But I was investing peanuts then. It's a huge structural advantage not to have
  a lot of money. I think I could make you 50% a year on $1 million. No, I know
  I could. I guarantee that."
  
  
  
  • 
    
    "Homespun Wisdom from the 'Oracle of Omaha'", BusinessWeek, 5
    July 1999.
  
  
  
  

Confidence

• "I always knew I was going to be rich. I don’t think
  I ever doubted it for a minute."

Experience

• "Can you really explain to a fish what it's like to
  walk on land? One day on land is worth a thousand years of talking about it,
  and one day running a business has exactly the same kind of value."
  

On

Benjamin Graham:

• A story that was passed down from Ben Graham
  illustrates the lemminglike behavior of the crowd: "Let me tell you the story
  of the oil prospector who met St. Peter at the Pearly Gates. When told his
  occupation, St. Peter said, “Oh, I’m really sorry. You seem to meet all the
  tests to get into heaven. But we’ve got a terrible problem. See that pen over
  there? That’s where we keep the oil prospectors waiting to get into heaven.
  And it’s filled—we haven’t got room for even one more.” The oil prospector
  thought for a minute and said, “Would you mind if I just said four words to
  those folks?” “I can’t see any harm in that,” said St. Pete. So the old-timer
  cupped his hands and yelled out, “Oil discovered in hell!” Immediately, the
  oil prospectors wrenched the lock off the door of the pen and out they flew,
  flapping their wings as hard as they could for the lower regions. “You know,
  that’s a pretty good trick,” St. Pete said. “Move in. The place is yours.
  You’ve got plenty of room.” The old fellow scratched his head and said, “No.
  If you don’t mind, I think I’ll go along with the rest of ’em. There may be
  some truth to that rumor after all."

Price Conscious

• "Price is what you pay. Value is what you get."
  

• "For some reason, people take their cues from price
  action rather than from values. What doesn’t work is when you start doing
  things that you don't understand or because they worked last week for somebody
  else. The dumbest reason in the world to buy a stock is because it's going up.
  "

• "Most people get interested in stocks when everyone
  else is. The time to get interested is when no one else is. You can't buy what
  is popular and do well."

• "We have tried occasionally to buy toads at bargain
  prices with results that have been chronicled in past reports. Clearly our
  kisses fell flat. We have done well with a couple of princes - but they were
  princes when purchased. At least our kisses didn't turn them into toads. And,
  finally, we have occasionally been quite successful in purchasing fractional
  interests in easily-identifiable princes at toad-like prices."- 1981
  Chairman's Letters to Shareholders

• "Never count on making a good sale. Have the purchase
  price be so attractive that even a mediocre sale gives good results."- 1974
  Letter to Shareholders

• "Investors making purchases in an overheated market
  need to recognize that it may often take an extended period for the value of
  even an outstanding company to catch up with the price they paid." - Berkshire
  Hathaway 1998 Annual Meeting

• "If you're an investor, you're looking on what the
  asset is going to do, if you're a speculator, you're commonly focusing on what
  the price of the object is going to do, and that's not our game."- 1997
  Berkshire Hathaway Annual Meeting

• "Despite three years of falling prices, which have
  significantly improved the attractiveness of common stocks, we still find very
  few that even mildly interest us. That dismal fact is testimony to the
  insanity of valuations reached during The Great Bubble. Unfortunately, the
  hangover may prove to be proportional to the binge."- March 2003

• On acquiring bad companies for cheap prices: "In my
  early days as a manager I, too, dated a few toads. They were cheap dates -
  I've never been much of a sport - but my results matched those of acquirers
  who courted higher-price toads. I kissed and they croaked."

• "I like to go for cinches. I like to shoot fish in a
  barrel. But I like to do it after the water has run out."- Oct. 2003 talking
  with
  
  Wharton MBA students

• "The important thing is to keep playing, to play
  against weak opponents and to play for big stakes."- Nov. 2002 talking with
  students at Gaston Hall

Circle of Competency

• "Sometimes you're outside your core competency. Level
  3 is one of those times but I've made a bet on the people and I feel I
  understand the people. There was a time when people made a bet on me."
  
  
  
  • Oct. 2002 when questioned about his investment in
    Level 3
  
  
  • See also wikipedia on
    
    Level 3 Communications.
  
  
  
  

• "There are all kinds of businesses that Charlie and I
  don't understand, but that doesn't cause us to stay up at night. It just means
  we go on to the next one, and that's what the individual investor should do."
  - Morningstar Interview

Sense of Humour

• "Berkshire’s arbitrage activities differ from those
  of many arbitrageurs. First, we participate in only a few, and usually very
  large, transactions each year. Most practitioners buy into a great many deals
  perhaps 50 or more per year. With that many irons in the fire, they must spend
  most of their time monitoring both the progress of deals and the market
  movements of the related stocks. This is not how Charlie nor I wish to spend
  our lives. (What’s the sense in getting rich just to stare at a ticker tape
  all day?)"

• "When they open that envelope, the first instruction
  is to take my pulse again." - 2001 Annual Meeting after mentioning that the
  instructions of his succession are sealed in an envelope at headquarters.
  

• "Those who attended (the annual meeting) last year
  saw your Chairman pitch to
  Ernie
  Banks. This encounter proved to be the titanic duel that the sports world
  had long awaited. After the first few pitches...I fired a brushback at Ernie
  just to let him know who was in command. Ernie charged the mound, and I
  charged the plate. But a clash was avoided because we became exhausted before
  reaching each other." - 1999 Letter to Shareholders

• "We've long felt that the only value of stock
  forecasters is to make fortune tellers look good. Even now, Charlie and I
  continue to believe that short-term market forecasts are poison and should be
  kept locked up in a safe place, away from children and also from grown-ups who
  behave in the market like children."

• At the bottom of the bear market in October 1974 a
  Forbes article interviewed Buffett. Buffett, for the first time in his life,
  made public prediction about the stock market.
  
   
  
  
  • "How do you feel? Forbes asked.
    
     
  
  
  • "Like an oversexed guy in a whorehouse. Now is the
    time to invest and get rich."
  
  
  
  

• "In a bull market, one must avoid the error of the
  preening duck that quacks boastfully after a torrential rainstorm, thinking
  that its paddling skills have caused it to rise in the world. A right-thinking
  duck would instead compare its position after the downpour to that of the
  other ducks on the pond." Letter to Berkshire Hathaway shareholders, 1997
  

Intelligent Decision Making

• "Charlie and I decided long ago that in an investment
  lifetime it's too hard to make hundreds of smart
  
  decisions. That
  
  judgement became ever more compelling as Berkshire's capital mushroomed
  and the universe of investments that could significantly affect our results
  shrank dramatically. Therefore, we adopted a strategy that required our being
  smart - and not too smart at that - only a very few times. Indeed, we'll now
  settle for one good idea a year. (Charlie says it's my turn.)"

• "The fact that people will be full of
  
  greed, fear
  or folly is
  predictable. The sequence is not predictable." - Financial Review, 1985
  

• "I will tell you how to become rich. Close the doors.
  Be fearful when others are greedy. Be greedy when others are fearful."-
  lecturing to a group of students at Columbia U. He was 21 years old.
  

• "We're more comfortable in that kind of business. It
  means we miss a lot of very big winners. But we wouldn't know how to pick them
  out anyway. It also means we have very few big losers - and that's quite
  helpful over time. We're perfectly willing to trade away a big payoff for a
  certain payoff." - 1999 Berkshire Hathaway Annual Meeting

• "The key to investing is not assessing how much an
  industry is going to affect society, or how much it will grow, but rather
  determining the competitive advantage of any given company and, above all, the
  durability of that advantage." - July 1999 at Herb Allen's Sun Valley, Idaho
  Retreat

• "The most common cause of low prices is
  pessimism-some times pervasive, some times specific to a company or industry.
  We want to do business in such an environment, not because we like pessimism
  but because we like the prices it produces. It's optimism that is the enemy of
  the rational buyer." - 1990 Chairman's Letter to Shareholders

• "Success in investing doesn't correlate with I.Q.
  once you're above the level of 25. Once you have ordinary intelligence, what
  you need is the temperament to control the urges that get other people into
  trouble in investing." - BusinessWeek Interview June 25 1999

• "Our future rates of gain will fall far short of
  those achieved in the past. Berkshire's capital base is now simply too large
  to allow us to earn truly outsized returns. If you believe otherwise, you
  should consider a career in sales but avoid one in mathematics (bearing in
  mind that there are really only three kinds of people in the world: those who
  can count and those who can't). " - 1998 Chairman's Letter to Shareholders
  

• "Time is the enemy of the poor business and the
  friend of the great business. If you have a business that's earning 20%-25% on
  equity, time is your friend. But time is your enemy if your money is in a low
  return business."- 1998 Berkshire Annual Meeting

• "Ben's Mr. Market allegory may seem out-of-date in
  today's investment world, in which most professionals and academicians talk of
  efficient markets, dynamic hedging and betas. Their interest in such matters
  is understandable, since techniques shrouded in mystery clearly have value to
  the purveyor of investment advice. After all, what witch doctor has ever
  achieved fame and fortune by simply advising 'Take two aspirins'?"- 1987
  Chairman's Letter to Shareholders

• "We will reject interesting opportunities rather than
  over-leverage our balance sheet." - Berkshire Hathaway Owners Manual
  

• "If you expect to be a net saver during the next 5
  years, should you hope for a higher or lower stock market during that
  period?"Many investors get this one wrong. Even though they are going to be
  net buyers of stocks for many years to come, they are elated when stock prices
  rise and depressed when they fall."This reaction makes no sense. Only those
  who will be sellers of equities in the near future should be happy at seeing
  stocks rise. Prospective purchasers should much prefer sinking prices."- 1997
  Chairman's Letter to Shareholders

Inactivity as Intelligent

• "We don't get paid for activity, just for being
  right. As to how long we'll wait, we'll wait indefinitely." - 1998
  
  Berkshire Hathaway Annual Meeting

• "I call investing the greatest business in the world
  because you never have to swing. You stand at the plate, the pitcher throws
  you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you.
  There's no penalty except opportunity lost. All day you wait for the pitch you
  like; then when the fielders are asleep, you step up and hit it."

• "The stock market is a no-called-strike game. You
  don't have to swing at everything--you can wait for your pitch. The problem
  when you're a money manager is that your fans keep yelling, 'Swing, you bum!'"
  - 1999 Berkshire Hathaway Annual Meeting

On Diversification

• "The strategy we've adopted precludes our following
  standard
  
  diversification dogma. Many pundits would therefore say the strategy must
  be riskier than that employed by more conventional investors. We disagree. We
  believe that a policy of portfolio concentration may well decrease risk if it
  raises, as it should, both the intensity with which an investor thinks about a
  business and the comfort-level he must feel with its economic characteristics
  before buying into it."- 1993 Chairman's Letter to Shareholders

• "Diversification is a protection against ignorance.
  It makes very little sense for those who know what they're doing."
  

On Margin of Safety

• "If you understood a business perfectly and the
  future of the business, you would need very little in the way of a
  
  margin of safety. So, the more vulnerable the business is, assuming you
  still want to invest in it, the larger margin of safety you'd need. If you're
  driving a truck across a bridge that says it holds 10,000 pounds and you've
  got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it
  covers, you may feel okay, but if it's over the Grand Canyon, you may feel you
  want a little larger margin of safety..."- 1997 Berkshire Hathaway Annual
  Meeting

Efficient Market Hypothesis

• “I’d be a bum on the street with a tin cup if the
  markets were always efficient.”

General Rules

• "Rule No.1: Never lose money. Rule No.2: Never forget
  rule No.1."

• "It's far better to buy a wonderful company at a fair
  price than a fair company at a wonderful price."

• "You’re neither right nor wrong because other people
  agree with you. You’re right because your facts are right and your reasoning
  is right—and that’s the only thing that makes you right. And if your facts and
  reasoning are right, you don’t have to worry about anybody else."

• "Our favourite holding period is forever." Letter to
  Berkshire Hathaway shareholders, 1988

• "When a management with a reputation for brilliance
  tackles a business with a reputation for bad economics, it is usually the
  reputation of the business that remains intact."

• "Risk comes from not knowing what you're doing."
  

• "If you don't know jewelry, know the jeweller."
  

• "If you don't feel comfortable owning something for
  10 years, then don't own it for 10 minutes."

• "There seems to be some perverse human characteristic
  that likes to make easy things difficult."

• "One’s objective should be to get it right, get it
  quick, get it out, and get it over... your problem won’t improve with age."
  

• "A public-opinion poll is no substitute for thought."
  

• "In the insurance business, there is no statute of
  limitation on stupidity."

• "If a business does well, the stock eventually
  follows."

• "The most important quality for an investor is
  temperament, not intellect... You need a temperament that neither derives
  great pleasure from being with the crowd or against the crowd."

• "The future is never clear, and you pay a very
  high price in the stock market for a cheery consensus. Uncertainty is the
  friend of the buyer of long-term values."

• "It's only when the tide goes out that you learn
  who's been swimming naked."

• "We will only do with your money what we would do
  with our own."

• "Occasionally, a man must rise above principles."
  

• "It takes 20 years to build a reputation and five
  minutes to ruin it. If you think about that, you'll do things differently."
  

• "Of one thing be certain: if a CEO is enthused about
  a particularly foolish acquisition, both his internal staff and his outside
  advisors will come up with whatever projections are needed to justify his
  stance. Only in fairy tales are emperors told that they are naked."
  

• When asked how he became so successful in investing,
  Buffett answered: "we read hundreds and hundreds of annual reports every
  year."

• "I never buy anything unless I can fill out on a
  piece of paper my reasons. I may be wrong, but I would know the answer to
  that. “I’m paying $32 billion today for the Coca Cola Company because...” If
  you can’t answer that question, you shouldn’t buy it. If you can answer that
  question, and you do it a few times, you’ll make a lot of money."

• "You ought to be able to explain why you’re taking
  the job you’re taking, why you’re making the investment you’re making, or
  whatever it may be. And if it can’t stand applying pencil to paper, you’d
  better think it through some more. And if you can’t write an intelligent
  answer to those questions, don’t do it."

• "I really like my life. I've arranged my life
  so that I can do what I want."

• "Someone's sitting in the shade today because someone
  planted a tree a long time ago."

Walking Away

• "I am out of step with present conditions. When the
  game is no longer played your way, it is only human to say the new approach is
  all wrong, bound to lead to trouble, and so on. On one point, however, I am
  clear. I will not abandon a previous approach whose logic I understand (
  although I find it difficult to apply ) even though it may mean foregoing
  large, and apparently easy, profits to embrace an approach which I don't fully
  understand, have not practiced successfully, and which possibly could lead to
  substantial permanent loss of capital." - in a letter to his partners in the
  stock market frenzy of 1969.

• "I just don't see anything available that gives any
  reasonable hope of delivering such a good year and I have no desire to grope
  around, hoping to 'get lucky' with other people's money. I am not attuned to
  this market environment, and I don't want to spoil a decent record by trying
  to play a game I don't understand just so I can go out a
  hero."
  

Source: WikiQuote

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Buffett: 'There are lots of loose nukes around the world'
By Lou Dobbs
CNN

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Sunday, June 19, 2005; Posted: 12:32 a.m. EDT (04:32 GMT)
(CNN) -- The legendary Warren Buffett and I sat down last week to talk about his views on the issues and challenges facing the United States and all Americans.

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DOBBS: I would like to begin first with something that may surprise a lot of people about you, and that is your interest in biochemical nuclear terrorism and thwarting what you consider to be the gravest threat to the country, and to the world, in point of fact. How did you first decide to focus your energy on that?

BUFFETT: Well, back in 1945, I delivered a paper that told about Hiroshima. And I didn't know much about physics, but I learned. And there's no question in my mind that the number one problem with mankind is the spread of nuclear knowledge.
And, you know, thousands of years ago we had psychotics and we had religious fanatics and we had megalomaniacs. But about the most they could do was throw a stone at somebody if they wished evil on them.
Today, since 1945, the ability to inflict evil, or harm, on other people in huge numbers has grown exponentially. And right now there's the knowledge around to use nuclear material. And we've got to hope that the wrong people don't get their hands on it.

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Read Full Interview Here