Wisdom from Mr. Buffet's letters

Context setting

There is not an iota of doubt that it would be difficult to find a person who has not been affected—directly or indirectly—by Mr. Warren Buffet. The same holds for me. He is considered to be one of the best-known investors in the world.

So, this blog is dedicated to him.

Me and Mr. Buffet

I try to establish a similarity of my investment strategy with Mr. Buffet’s ideology. I may not be an expert on value investing, but I try to infuse the long-term horizon into my investment portfolio.

The long-term perspective does not hold solely for investment and should be expanded into other critical aspects of life. To cite a few examples, consider the decision to rent or buy a home, purchasing a car on EMI or direct cash payment, expenses on buying new books and new online courses, etc. I owe a big thank you to him.

Apart from that, let me touch upon my one wish also.

A long-time wish was fulfilled  

It was my long wish when I just finished reading the book “The Warren Buffet Way” by Robert G. Hagstrom. One can read my blog on this book. In this blog, I mentioned my personal wish to read selected annual reports of Berkshire Hathaway Inc. which contains the lesson on value investing and wisdom shorts by Buffet himself.

I am glad that in the recent flight journey with two hours of aeroplane mode, I fulfilled this wish. It was a wonderful trip from Ahmedabad to Chennai where I cherished the beautiful clouds for the very first time in my life. After all, clouds were never this perfect.

A big thanks to my office for giving me this wonderful trip and immense time to read.

Three takeaways

I would like to highlight the three takeaways from reading the last three letters written by Mr. Buffet for the shareholders of Berkshire Hathaway Inc.

So, let’s dig into it.  

Takeaway#1 - Patience is the real money in investment.

It indirectly refers to the habit of long-term investment.

Let me present an excerpt from the letter –

“The lesson from Coke and AMEX? When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable.”

He admits that he has made many mistakes in selecting the business, but he equally believes that one right decision can offset multiple wrong decisions.

I believe that this principle can be graciously applied in our lives too. We get anxious about selecting the perfect options – in terms of investment, life partner, books, courses, company to work, work project, etc. – but the truth is that it would always be difficult to pick the right option.

Hence, the apt solution would be to make multiple attempts at selecting the options and one right option would offset it all.

I believe that everyone is trying their best to navigate amidst life’s struggles, but the only thing that is in our control is to keep picking the options (even though we are) unaware of how it would unfold. And we just need a bit of patience to stick to our option.

Now, let’s dig a bit into the next takeaway.  

Takeaway#2 – Appreciate your people.

He did not forget to say big words about his executives. In the 2023 letter, he wrote highly of Mr. Ajit Jain who manages the insurance industry of Berkshire. Mr. Buffet admitted that he was like a wanderer in the wild desert of the insurance business. But it was a lucky day in 1986 when Mr. Jain joined the company and then started a path of transformation for the company.

An excerpt from the letter –

“Our position would not be what it is if Ajit Jain had not joined Berkshire in 1986. Before that lucky day – aside from an almost unbelievably wonderful experience with GEICO that began early in 1951 and will never end – I was largely wandering in the wilderness, as I struggled to build our insurance operation.”

Mr. Buffet even took an additional step to praise his partner Charlie Munger (who died in Nov 2023 at the age of 99) by giving the title of 2023 shareholders letter as “Charlie Munger – The Architect of Berkshire Hathaway”.

Let’s take another example from Bollywood.

It is not only Mr. Buffet but I have watched multiple interviews with famous celebrities answering what makes SRK the king of Bollywood. And the answer always hovers around that he makes the other person king through little gestures of appreciation.

Thanks to my friend Archit Saxena, I was reading the book “How to Talk to Anyone” by Leil Lowndes. It also talks about how one can make the other person feel better about themselves. She suggested the technique of “Never the Naked Thank You” which states that the word Thank You should be accompanied by “Thank You for…” This term “for” would be helpful in adding the additional remark of appreciation. I have tried this technique with a few of my colleagues and have always received a warm response in return.

Takeway#3 – Be emotionally stable in the market.

Mr. Buffet suggests that the market participants should be emotionally stable. I have observed fellows get worried about the changing graphical trend of the shares. It seems as if their heart rate gets synched with the trend in the stock prices. I have always tried to avoid this situation. That’s why I mostly prefer mutual funds and highly valued stocks. I have also distanced myself from the Initial Public Offerings (IPO) frenzy.

A word of caution - I admit stock selection is purely a personal choice, and thus this section of the blog is not intended to offer any kind of financial advice.

In a nutshell

• Life is a struggle for everyone. Everyone is in pursuit of their path. The best way to navigate is to hold patience.

• Play long-term games in your investing journey and in life too.

• Appreciate your people. It would be mutually beneficial.

Call to action

This blog would justify the time and effort (while writing it) even if one of the readers opened the page and read at least one letter from Mr. Buffet to his shareholders. I would highly recommend everyone to read at least one letter. These are very small in size (less than 10-15 pages) and written in a very simple and interactive manner.

It contains the wisdom of one of the best investors of our time.

Read the letters here.

Till then, goodbye!

Hope to write my next blog soon!

(Disclaimer – The expressed views are based on his readings and are purely personal in nature.)