market folly

Warren Buffett of Berkshire Hathaway was recently profiled in an HBO Documentary entitled, "Becoming Warren Buffett."  The film by Peter Kunhardt examines the life of the great investor.

Below are some notes and anecdotes:

-  He was always fascinated by numbers and it talks about how at an early age he discovered the power of compound interest.  He concluded, "It's a pretty simple concept, but over time it accomplishes extraordinary things."

- He goes to McDonald's everyday for breakfast on the way to work and has three options based on how much change his wife has given him for the day.  Yup, one of the biggest owners of American Express (AXP) pays for breakfast in cash.

- He framed newspapers from various financial crises and hung them on the wall as a reminder that "anything can happen in this world."

- As a young student, all his teachers owned AT&T at the time and he shorted the stock and showed the teachers proof to kind of spite them.

-  Buffett learned two rules of investing from Benjamin Graham: Rule 1: Never lose money.  Rule 2: Never forget rule number one.

- Doesn't hang his diploma from undergrad or graduate school, but instead the certificate from the Dale Carnegie course of public speaking, which he says changed his life since he was so scared of it.

- Charlie Munger said Buffett made a lot of money early on buying thinly traded securities that were incredibly cheap statistically ("cigar butt" investing).

- Started his first partnership with $105,100 - $100 from himself and the rest from investors.

- Buffett says, "The trick in investing is to just sit there and watch pitch after pitch go by and wait for the one in your sweet spot.  There's a temptation for people to act far too frequently in stocks simply because they're so liquid.  Over the years, you develop a lot of filters.  I do know what I call my circle of competence.  I stay within that circle.  Defining what your game is, where you're going to have an edge is enormously important."

- He later adds, "If you're emotional about investment you're not going to do well."

- Charlie Munger had a big impact on him by shifting him to look at wonderful companies at fair prices rather than fair companies at wonderful companies.

- Buffett said he spends 5-6 hours a day reading.  He likes to just sit and think.  When asked to describe what one word describes his success, he said 'focus.'

- "The biggest thing in making money is time.  You don't have to be critically smart, you just have to be patient."

- "Look for the job you'd take if you didn't need a job."

Someone else has uploaded it YouTube and the video is embedded below:



For more on the Oracle from Omaha, be sure to also check out Warren Buffett's recent interview with Charlie Rose.