Stupidity
I think part of the popularity of Berkshire Hathaway is that we look like people who have found a trick. It’s not brilliance. It’s just avoiding stupidity.
…identify the main stupidities that do bright people in and then organize your patterns for thinking and developments, so you don’t stumble into those stupidities.
The amazing thing is we did so well while being so stupid. That’s why you’re all here: you think that there’s hope for you. Go where there’s dumb competition.
Opportunity Cost
The right way to make decisions in practical life is based on your opportunity cost. When you get married, you have to choose the best [spouse] you can find that will have you. The rest of life is the same damn way. You have to figure these things out if you want good results in life, and if you don’t, well, you have to pretend that you can get good results in life. If you have enough sales ability, maybe you can get by with it. (At Harvard-Westlake School, Jan. 2010)
We are apparently slow learners. These opportunity costs don’t show up on financial statements, but have cost us many billions.
Being Happy and Successful
If all you succeed in doing in life is getting rich by buying little pieces of paper, it’s a failed life. Life is more than being shrewd in wealth accumulation.
Remember that reputation and integrity are your most valuable assets – and can be lost in a heartbeat.
A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage etc.
Just avoid things like AIDs situations, racing trains to the crossing, and doing cocaine. Develop good mental habits. If your new behavior earns you a little temporary unpopularity with your peer group, then the hell with them.
Avoid working directly under somebody you don’t admire and don’t want to be like.
Avoid evil, particularly if they’re members of the opposite sex.
Getting Rich
Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day. At the end of the day – if you live long enough – most people get what they deserve.
It’s not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it – who look and sift the world for a mispriced bet – that they can occasionally find one.
Learning
This is really crucial: Warren [Buffett] is one of the best learning machines on this earth. The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you.
Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.
I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.
Envy/Jealousy
If you are comfortably rich and someone else is getting richer faster than you by, for example, investing in risky stocks, so what? Someone will always be getting richer faster than you. This is not a tragedy.
Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?
Debt
Once you get into debt, it’s hell to get out. Don’t let credit card debt carry over. You can’t get ahead paying eighteen percent.
Marriage
What’s the best way to get a good spouse? The best single way is to deserve a good spouse because a good spouse is by definition not nuts.
Mistakes
I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.
Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn’t remind you. Why not celebrate stupidities in both categories?
There’s no way that you can live an adequate life without many mistakes. In fact, one trick in life is to get so you can handle mistakes. Failure to handle psychological denial is a common way for people to go broke.
I don’t want you to think we have any way of learning or behaving so you won’t make mistakes.
The most extreme mistakes in Berkshire’s history have been mistakes of omission. We saw it, but didn’t act on it. They’re huge mistakes — we’ve lost billions. And we keep doing it. We’re getting better at it. We never get over it. There are two types of mistakes: 1) doing nothing; what Warren calls “sucking my thumb” and 2) buying with an eyedropper things we should be buying a lot of.
Our biggest mistakes were things we didn’t do, companies we didn’t buy.
Where you have complexity, by nature you can have fraud and mistakes.
If you can’t understand it, don’t do it” is a simple rule of thumb.