12 Lessons from the Wisest Billionaires: Warren Buffett and Charlie Munger 🤑
12 Lessons from the Wisest Billionaires: Warren Buffett and Charlie Munger 🤑
Issue #90: Lessons from Berkshire Hathaway Annual Share Holder Meeting. The Wheel of Life. Beginner → Master.
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🎓 Learn
Last week, I had the privilege of attending the 2024 Berkshire Hathaway Annual Shareholder Meeting.
Berkshire Hathaway is a $700 billion company managed by legendary Warren Buffett and Charlie Munger (late).
Drawing inspiration from these two influential figures has been incredibly impactful for me. Being in the same room with Warren was a great honor and a truly unique life experience.
My sincere hope is that the lessons I learned from this event will help you: grow and prosper in life, business, relationships, and wealth, just as they have for me.
Here are a few big (and small) lessons from this event that may change your life:
Lesson #1: Be a Proud Copycat
Someone asked Warren about the importance of having a mentor or hero in life. He said, “If you copy the right people, you will be off to a great start in life.”
The best (and fastest) way to build a successful life is to find people who inspire you, absorb all their teachings and principles, and proudly copy them.
Billionaire Mohnish Pabrai, who manages a billion-dollar portfolio, credits his personal and business success to copying the investment strategies and mental models of his heroes, Charlie Munger and Warren Buffett.
Warren Buffett is influenced by his heroes → Benjamin Graham and Chuck Feeney.
Charlie Munger tried to imitate his hero → Benjamin Franklin
You might think successful businesses are built by creating their own unique and innovative ideas, but in reality, it’s not:
Microsoft is great at building copycat businesses: Excel was a copycat of Lotus 1-2-3 and VisiCalc. Word was a copycat of WordPerfect. PowerPoint was developed by a small company, and Microsoft acquired them.
The iPhone was inspired by a Motorola phone.
Elon Musk didn’t invent Tesla; he bought it from someone.
McDonald's burger operation was copied from the McDonald brothers years ago and still runs successfully with minimal changes.
I understand we also get advice to be authentic, original, and yourself; however, the message here is not to wait and waste your whole life finding a perfect, unique idea. Instead, adopt a successful idea and then personalize it as you grow.
Lesson #2: Compounding Favors Those Who Are Patient
Charlie Munger said, “Never interrupt the compounding.”
Berkshire Hathaway has ~$180+ billion of cash in its bank account. Someone asked why Warren had not invested this money yet. Warren said, “We only swing when we find the right pitch.” In other words, we are patient to find the right opportunity to invest in.
I found it very profound. In this hustle culture, we are always tempted to do something. It’s a great reminder that sometimes, we only need to wait, rest, and prepare for the right opportunity.
When we don’t take enough time to think and prepare, hasty decisions lead to fatal failures.
Make sure you rest enough to recharge your body to stay healthy and fit for the long run.
Make sure you are not wasting your time and resources chasing every shiny object.
Warren summed up this point in his quirky style: “You can’t deliver a baby in 1 month by making 9 women pregnant.”
Lesson #3: Heads I Win, Tails I Don’t Lose Much
When someone asked Warren Buffett for life and investment advice, he said two words: “Loss Aversion.”
Berkshire Hathaway is a $700+ billion-dollar company.
Charlie and Warren credit their 60-year winning streak to Loss Aversion: focus on avoiding mistakes instead of being too fixated on trying to win.
Mohnish Pabrai shared a story of young Warren applying loss aversion: Warren Buffett walked with his knees bent so he didn’t fall, demonstrating his way of avoiding mistakes.
It’s a very powerful mental model. When we focus only on “winning,” we make more mistakes, cut corners, and make compulsive decisions. But when you think about all the ways you can lose and then plan to avoid those mistakes, most likely, it will lead you to win.
You can use ‘Loss Aversion’ in all facets of life:
Relationships: Think about what actions and behaviors can break a relationship and try to avoid those actions.
Business: Think about what can lead to a bad financial quarter or year and focus on that.
Career: Think about what you should avoid instead of what you need to accomplish to succeed in your career.
Charlie Munger’s favorite line: “All I want to know is where I’m going to die, so I never go there.”
Lesson #4: Take a Simple, Basic Idea and Take it Very Seriously
Someone asked Warren: “If he was 20 years old in 2024, how would he approach investment? Would he do the same process he did 50 years ago?”
Warren’s answer: “Yes, he would still read a thousand pages of Moody’s manual to understand businesses.”
What I loved about this answer is—There are no shortcuts to success. You need to do the right thing and real work to be successful.
Also, his answer points to a very important life advice: In order to be consistently successful, you just need to take a simple (reading Moody’s manual), basic idea (understanding business), and take it very seriously (reading 20,000 pages).
Lesson #5: Big Decisions are the Outcome of Thousands of Small Learnings
When someone asked how Warren has been able to make the right investment decisions consistently for over 60 years.
His response was — “The circle of competency grows slowly.”
You grow your circle of competency (expertise in a particular field) by:
Reading → Warren spends 80% of his day (6+ hours) reading. He reads 500+ pages every day.
Learning → He (and Charlie Munger) are obsessive learners.
Experimenting → They bought See’s Candies (a California-based chocolate company) and tried to scale it to other states in the USA, but they didn’t succeed. They applied that learning when they bought Coca-Cola; they focused on Coca-Cola’s capability for scale and global distribution.
George S. Patton Jr. ’s words fit so well here: “He who sweats more in training bleeds less in battle.”
And here are a few small (but powerful) learnings from this event:
Power of Luck: It plays a role in success, but you can create luck through growing your circle of competence. If you find yourself lucky, pass on some luck to others by teaching and helping them.
Relationships: Having reliable and trusted friends and partners is very important for a happy and long life. Find the person you want to spend all your time with and live like it’s your last day. And you should marry the best person who wants to have you.
Advice on Living: Live a simple life. Warren eats the same food that he used to eat as a 6-year-old. Charlie never complained about food (or anything); he will eat what you offer him. Be useful.
Purpose: My favorite 1-liner from Warren was, “Find a job that you would like to do even if you didn’t have a job.” What would you love to do, or will you do it anyway if you are not getting paid?
Be Kind: The world will be better if more people are kinder than richer.
Reading: When asked whom Charlie would like to meet in his life, he said he had already met everyone by reading their “books.”
True Legacy: At 99, Charlie was less interested in the world, but the world was (and still is) more interested in him.
My favorite lessons from Warren Buffet are: Read more, invest for a long time, trust in compounding, be reliable, and live a simple life.
🚀 Growth Tip
I found the concept of “The Wheel of Life” very helpful in living an intentional life.
The process is simple: Rate (out of 10) yourself on this question, “To what extent do I feel like my current actions align with my personal values?”
🤩 Inspiration
The path to mastery is practice, practice, practice!
Anil
May the Peaceful Growth be with you! 🪴
P.S. I have started publishing bit-size tips and inspiration on Substack Notes. I would appreciate some love, likes, and comments there. ❤️