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Monty’s Opening Thoughts May

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Warren Buffett

One of my clients is reading The Snowball: Warren Buffett and the Business of Life, a biography about Warren Buffett by Alice Schroeder. In fact, he brought the book into my office and dropped it (all 960 pages) on our reception desk counter top. He teased me about how I could learn something by reading it and that this book was written in a very similar style to the books I’ve written.

Well, whether he was teasing me or flattering me, I give him credit for reading the book! Of course, reading is how we grow and expand our knowledge. I have a favorite quote on this from Jim Rohn: “Poor people have big TVs. Rich people have big libraries.

 

Many people, however, probably grab The Snowball, or other written materials from Warren Buffett, hoping to find an investing tip which will make them rich. Unfortunately, no matter how many times you may have read this book when it first came out (2008), your investments would still have suffered with the stock market correction that year. People are looking for that one little investing secret that made Buffett rich, as though they could duplicate it and be rich themselves tomorrow. But it’s not so easy!

Unless you have billions of dollars to invest, what you read about Warren Buffett’s investing techniques will be of very little value, as they reflect his recent practices with his $65.8 billion. He can do things that you or I cannot do. No matter how bad the stock market tanks, he can afford to ride it out—and will always have food on his table.

So, should you read about Warren Buffett? Absolutely! And when you do, you’ll see that he was a patient accumulator of wealth. He started when he was six years old selling chewing gum door-to-door, then made himself a multimillionaire by the age of 35 and didn’t stop until he became the world’s richest man. And there is the real story! His wealth has more to do with his drive, focus, dedication, and determination, rather than his asset allocation, alpha, beta, Sharpe ratios, growth, or value.

Buffett displayed an interest in business and investing at a young age. In one of his first business ventures, Buffett sold chewing gum, Coca-Cola bottles, and weekly magazines door to door. He also worked in his grandfather’s grocery store. While still in high school, he made money delivering newspapers, selling golf balls and stamps, and detailing cars, among other means. On his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route. In 1945, as a high school sophomore, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in the local barber shop. Within months, they owned several machines in 3 different barber shops across Omaha. The business was sold later in the year for $1,200 to a war veteran.

Buffett’s interest in the stock market and investing dated to his boyhood days, when he spent afternoons in the customers’ lounge of a regional stock brokerage near his father’s own brokerage office. On a trip to New York City at age ten, he made it a point to visit the New York Stock Exchange. At 11, he bought three shares of Cities Service Preferred for himself, and three for his sister Doris Buffett (founder of The Sunshine Lady Foundation). At the age of 15, Warren made more than $175 monthly delivering Washington Post newspapers. In high school, he invested in a business owned by his father and bought a 40-acre farm worked by a tenant farmer. He bought the land when he was 14 years old with $1,200 of his savings. By the time he finished college, Buffett had accumulated a princely sum of more than $90,000 in savings measured in 2009 dollars

By now you must have the idea that Buffett is a hard worker with lots of determination. That combination makes successful individuals—and that is no secret. Reading about him, and other successful people, will help speed up the process for your own success. In addition, it is very helpful to hire professional advice, so that you avoid costly mistakes. Attorneys, financial advisors and CPAs should be part of your team in accumulating and preserving wealth. This is true whether you’re interested in amassing hundreds of thousands, millions or tens of millions.

Our office is built around this team of advisors concept. We use a holistic approach at assisting clients to achieve their financial objectives, by reviewing their entire financial picture at one time. I would encourage you to contact us with your tax and investment questions. We are here for you and want to assist in the lowering of your taxes, building of your wealth, and securing your financial future.
Warm Regards, Monty