Warren Buffet’s 10 Rules For Success.
No. 1: REINVEST YOUR PROFITS – When you first make
money, you may be tempted to spend it. Don’t. Instead, reinvest the
profits. Buffett learned this early on. In high school, he and a pal
bought a pinball machine to put in a barbershop. With the money they
earned, they bought more machines until they had eight in different
shops. When the friends sold the venture, Buffett used the proceeds to
buy stocks and to start another business.
No. 2: BE WILLING TO BE DIFFERENT – Don’t base your
decisions upon what everyone is saying or doing. When Buffett began
managing money in 1956 with $100,000 cobbled together from a handful of
investors, he was dubbed an oddball. He worked in Omaha, not on Wall
Street, and he refused to tell his partners where he was putting their
money. People predicted that he’d fall, but when he closed his
partnership 14 years later, it was worth more than $100 million.
No. 3: NEVER SUCK YOUR THUMB – Gather in advance
any information you need to make a decision, and ask a friend or
relative to make sure that you stick to a deadline. Buffett prides
himself on swiftly making up his mind and acting on it. He calls any
unnecessary sitting and thinking “thumb-sucking.”
No. 4: SPELL OUT THE DEAL BEFORE YOU START – Your
bargaining leverage is always greatest before you begin a job – that’s
when you have something to offer that the other party wants. Buffett
learned this lesson the hard way as a kid, when his grandfather Earnest
hired him and a friend to dig out the family grocery store after a
blizzard. The boys spent five hours shoveling until they could barely
straighten their frozen hands. Afterward, his grandfather gave the pair
less that 90 cents to split.
No. 5: WATCH SMALL EXPENSES – Buffett invests in
business run by managers who obsess over the tiniest costs. He once
acquired a company whose owner counted the sheets in rolls of 500-sheet
toilet paper to see if he was being cheated (he was). He also admired a
friend who painted only the side of his office building that faced the
road.
No. 6: LIMIT WHAT YOU BORROW – Buffett has never
borrowed a significant amount – not to invest, not for a mortgage. He
has gotten many heartrending letters from people who thought their
borrowing was manageable but became overwhelmed by debt. His advice:
Negotiate with creditors to pay what you can. Then, when you’re
debt-free, work on saving some money that you can invest.
No. 7: BE PERSISTENT – With tenacity and ingenuity,
you can win against a more established competitor. Buffett acquired the
Nebraska Furniture Mart in 1983 because he liked the way its founder,
Rose Blumkin, did business. A Russian immigrant, she built the mart from
a pawnshop into the largest furniture store in North America. Her
strategy was to undersell the big shots, and she was a merciless
negotiator.
No. 8: KNOW WHEN TO QUIT – Once, when Buffett was a
teen, he went to the racetrack. He bet on a race and lost. To recoup
his funds, he bet on another race. He lost again, leaving him with close
to nothing. He felt sick – he had squandered nearly a week’s earnings.
Buffett never repeated that mistake.
No. 9: ASSESS THE RISKS – In 1995, the employer of
Buffett’s son, Howie, was accused by the FBI of price-fixing. Buffett
advised Howie to imagine the worst- and best-case scenarios if he stayed
with the company. His son quickly realized the risks of staying far
outweighed any potential gains, and he quit the next day.
No. 10: KNOW WHAT SUCCESS REALLY MEANS – Despite
his wealth, Buffett does not measure success by dollars. In 2006, he
pledged to give away almost his entire fortune to charities, primarily
the Bill and Melinda Gates Foundation. He’s adamant about not funding
monuments to himself – no Warren Buffett buildings or halls. “When you
get to my age, you’ll measure your success in life by how many of the
people you want to have love you actually do love you. That’s the
ultimate test of how you lived your life.”
Good stuff. I agree with all the rules....
Have A great Cheap Cheetah Day!
