The Oracle
As I was reading Warren Buffet’s shareholder letter, it really hit me that there is such a shortage of strong, compassionate, and wise leaders in this world. All too often leaders/ owners carry a “me first” mentality and struggle with transparency, communication, and empathy. It is amazing how quickly an organization can decline with distracted and weak leadership.
Warren is an example of the exact opposite. He has grown Berkshire to have the largest net worth of any company in America, and his comments and investment direction has the power to move markets. He is routinely called the Oracle of Omaha and his shareholder letters are the most widely read and discussed CEO letters in the investment and business community. This year’s letter is particularly touching as it is written in memory of his best friend and financial partner Charlie Munger who died at 99 this past November. Although this letter, like many before it, is filled with financial wisdom, I found a world of inspiration in leadership and humanity. Enjoy.
7 Principles Warren Buffet and Oracle like Leaders Follow:
1. Don’t take up the limelight: (servants not Kings)
Both he and Charlie lived this principle perfectly. Although these are some of the most successful men on the planet, they never sucked all the air out of the room, they never took credit for more than they did, and they never let their own press go to their heads. They believed they were servants not kings.
Clips from the article:
“Charlie was the “architect” of the present Berkshire, and I acted as the “general contractor” to carry out the day-by-day construction of his vision”.
“Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades”
“Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect”
2. Be transparent and communicate directly:
Too many leaders send proxies or don’t communicate at all. Take the time in good times or bad to communicate and share direction with your team. Find your rhythm, stick to it and do it in person.
“We cherish their presence (our investors) and believe they are entitled to hear every year both the good and bad news, delivered directly from their CEO and not from an investor-relations officer or communications consultant forever serving up optimism and syrupy mush.”
3. Keep a mental model of the customers and serve them completely:
He cleverly explains his uses his sister as the avatar for his customers (the investors) and builds the business and his communication around that mental model. Never lose focus on who and why you are in this business. You are here to serve them not the other way around.
“In visualizing the owners that Berkshire seeks, I am lucky to have the perfect mental model, my sister, Bertie.”
“Every year Bertie will read what I have to say. My job is to anticipate her questions and give her honest answers.”
“So, what would interest Bertie this year?”
“Our allegiance will always be to our country and our shareholders”
4. Be Clear on the Vision and Communicate it repeatedly:
Everyone knows what Berkshire does, yet he continues (even now) to state clearly and distinctly who they are, what they do and where they are planning to go. His letters to shareholders are dated back to inception in 1965 and he continues to share the vision.
“What We Do- Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring.”
Berkshire benefits from an unusual constancy and clarity of purpose”
5. Only partner with good people:
I have certainly learned this the hard way. You can’t outmaneuver a rascal; in the end they will always cheat you. Keep them off your teams and out of your partnerships.
“In 1863, Hugh McCulloch, the first Comptroller of the United States, sent a letter to all national banks. His instructions included this warning: “Never deal with a rascal under the expectation that you can prevent him from cheating you.” Many bankers who thought they could “manage” the rascal problem have learned the wisdom of Mr. McCulloch’s advice – and I have as well. People are not that easy to read. Sincerity and empathy can easily be faked. That is as true now as it was in 1863.”
6. Master the blocking and tackling:
All too often we are looking for the next shiny thing. But being the best and being consistent at the basics is what will make you win above your competition. Warren routinely invests in solid leadership teams and well-run business. No magic just consistently flawless blocking and tackling.
“Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring.”
“Our Not-So-Secret Weapon - One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital”
“Favored businesses are run by able and trustworthy managers”
“Berkshire benefits from an unusual constancy and clarity of purpose”
7. Always keep a scorecard:
If you don’t have a scorecard, you will never know if you are on track and will quickly lose your way. Strong leaders have good scorecards and help their entire team know what it takes to win.
Notes that Resonated
Business is a team sport. Your success is dependent on your ability to attract a team.
Things can go bad very quickly in an organization when the leadership team is weak or gets distracted. -Amp it up
“Appreciate where you are in your journey. Every season has a purpose” -thoughts wonder
The strongest hearts are always the ones with the most scars
Charlie Munger: show me the incentives and I will show you the outcome
Too much worry about things beyond our control doesn't change the future and only steals from our present joy
Things to read
Berkshire Hathaway’s Warren Buffet’s annual newsletter
https://www.berkshirehathaway.com/letters/2023ltr.pdf
Additional Shareholder letters published dating back to 1965 https://a.co/d/1UBREcL
Videos to watch
Another oracle leader that built three billion-dollar companies. When he stepped down from the CEO seat his stock lost millions in value overnight.
Top Quotes
“You will never know how strong you are until being strong is the only choice you have” -Bob Marley
Mortgage & Housing Market
President Joe Biden said during Thursday’s State of the Union address that the government knows housing costs are too high and plans to do something about it.
“I know the cost of housing is so important to you. If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting,” Biden said
He is proposing legislation and spending for:
$10,000 tax credit for middle class home buyers
Tax credit for people that sell a starter home
Legislation aimed to build and renovate more homes
Critics think this is the wrong approach:
“Simply put, demand continues to outpace supply; and subsidizing more demand inflates house prices,” said Ed DeMarco, president of the Housing Policy Council, a trade association of lenders, insurers and data companies in the housing industry. -CNN Business
https://www.cnn.com/2024/03/08/economy/fed-biden-housing-affordability-crisis/index.html
Berkshire Hathaway sells housing stocks:
Fast-forward to 2024, and this month Berkshire Hathaway disclosed to the SEC that it had sold off its 5,969,714 shares of D.R. Horton—the vast majority of its homebuilder bet—by December 31, 2023. It's interesting that Buffett would so quickly sell off his D.R. Horton stake and exit the homebuilder bet. Feb. 28, 2024
https://www.fastcompany.com/91040265/housing-market-warren-buffett-d-r-horton-homebuilder-bet#:~:text=Fast-forward to 2024%2C and, exit the homebuilder bet.
Food & Drink
Foldable lap desk: Fansdreams Pi Foldable Lap Desk, Car Table and Laptop Stand
