Do You Think Like Warren Buffett And Benjamin Graham?
I recently finished the mammoth book “The Snowball” – the biography of Warren Buffett, written by Alice Schroeder.
I bought this book around 6 or 7 years ago, but I just managed to read it now in 2023. So out of curiosity I viewed some of the negative reviews on Amazon. Most people disliked the “irrelevant and boring stories” and that you allegedly get no insights. Ha ha, this is so not true! Poor people!
There is basically no page that doesn’t contain some wisdom – and after reading the whole book, the complete picture reveals itself like a finished puzzle.
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How do You Think About Money?
The most entertaining thing was actually checking myself if I had similar thinking about how to approach things. For example, there is one episode from the 1940’s where young Warren (who had a job as a paperboy at that time) was visiting horse races:
“(…) And he [Warren] lost in the first race. But he didn’t go home. He kept on betting and he kept on losing, until he had lost more than $175 and his pockets were stripped nearly bare.
“(…) I went to the Hot Shoppe, and I treated myself the biggest thing they offered – a giant fudge sundae or something – and there went all the rest of my money. While I ate, I figured out how many newspapers I had to deliver to make up what I had lost. I was going to have to work more than a week to make back the money. And I’d done it for dumb reasons.
“You are not supposed to bet every race. I’d committed the worst sin, which is that you get behind and you think you’ve got to break even that day. The first rule is that nobody goes home after the first race, and the second rule is that you don’t have to make it back the way you lose it. That is fundamental, you know.”
“Did he realize that he’d made an emotional decision?
“Oh, yeah. Oh, I was sick. It was the last time I ever did anything like that.”
Another episode, in the early 1950’s, after Warren met his mentor Benjamin Graham, Graham illustrates to Buffett what it’s all about:
‘Remember one thing Warren: Money isn’t making that much difference in how you and I live. We’re both going down to the cafeteria for lunch and working every day and having a good time. So don’t worry too much about money, because it won’t make much difference in how you live.’
That’s exactly how I feel! And I think this approach is the most valuable thing people can do in their lives.
Time For You to Thrive
“But maybe”, you might say, “I don’t want to change my life necessarily, but the life of someone else, my family for example”.
I think Warrens and Grahams approach and attitude still counts then. If the “urge” to make money is because you want to change something, it is most of the time a recipe for disaster, means unhappiness (and in the end it is all about happiness, right?). It still contains the component that you apparently ‘need to buy’ something in order to feel or experience something (which will be pleasure).
Which leads ultimately to the insight that you just buy feelings in the end – whereby the true question remains still unsolved: Why don’t you experience a great feeling already (which you wanted to buy with X or Y)?
If you insist to say: “Well, I need money for my kids’ college” or “To save for retirement”, I can tell you that there are actually easy strategies out there to use and for anyone to achieve (hey, you will even find them in this in this blog! And if you don’t believe they work, challenge me).
Means, there is then no need at all to jump into an unsatisfying business or financial adventure only to make money. How much you „make“ is not necessarily important also, but how muck you keep. Offense wins games, defense wins championship. In the end, it is all about your defensive (saving) strategy – not sales and profit.
Sure, if you need a million by next week, it gets tricky. But Warren Buffett never thought that way. He had a long-term plan figured out, based on math and pretty conservative approaches. Why did he do it? He had fun for the sake of competitiveness. Graham did it (making money on the stock market) as an intellectual exercise. They didn’t do it because they wanted the money in order to satisfy some material needs, to escape something or to impress their neighbours.
By reading the book, all these small episodes paint a great picture of a pretty interesting life – and a pretty interesting approach to money and investments.
Have the technical requirements changed? Yes, but that is not the point. It is how to think intelligently while investing – if you only grasp half of the principles in this book, and are able to execute that knowledge like a boss, you dont need to worry about money. Never again.
If you want to buy the book on Amazon right away, you can do so immediately through this affiliate link (there will no be additional costs through this link).
If you never read Benjamin Grahams “Intelligent Investor”, it is time to do so! To Buffett, this classic is still the best book on finances today. You can get it here
