WARREN BUFFETT'S MANAGEMENT SECRETS (FULL AUDIO BOOK)

Introduction to the chronicles of Warren Buffett's investing life. Much has been written about his investment methods. Each and every investment he has made has been dismantled and analyzed in excruciating detail. David and I have only written the

book

s Buffetology The Buffetology Work

book

The New Buffetology, The Dao of Warren Buffett and Warren Buffett and the Interpretation of Financial Statements, All About Warren's Investment Methods, and All the International Best Sellers, but What was most missing from Warren Buffett's body of literature was a book that addressed and discussed the brilliant way in which Warren has managed his business and the people who manage Berkshire Hathaway's 233,000 employees around the world.

In addition to being an investing genius, Warren Buffett is also a genius as a manager. With more than 88 CEOs of different companies reporting directly or indirectly to him in modern business, no man has led a more talented group of managers in so many businesses. diverse and obtained spectacular results in many ways. Buffett's

management

record surpasses even his surprising investment record at Berkshire Hathaway, where the company's annual net operating income grew from $18 per share in 1979. At four thousand ninety-three dollars per share in two thousand seven, this equates to a compound annual growth rate of 21.39 percent, a record that indicates that Warren and his managers are doing a fantastic job of taking care of the store compared with Warren's personal investment portfolio for the same period grew at a CAGR of 19.78 percent, meaning we can argue that as a manager, Warren outdid himself as an investor in our quest to provide you everything related to Warren Buffett.

We've written the first book to take an in-depth look at Warren's Management Methods: What They Are, How They Work, and How They Can Be Used. We discussed the impact Dale Carnegie had on Warren's life and how Carnegie's teachings helped transform Warren into the master manager he is today. We've kept the

audio

book easy to listen to. With short chapters, the methods Warren uses are simple and easy to understand, but as you will see, their impact is powerful. We look to the future and imagine many generations using Warren's enlightened

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methods to inspire and motivate people of all ages to achieve their dreams and visions Mary Buffett and David Clarke 2009 Overview Warren Buffett's Management Secrets Once Upon a Time A slightly nerdy young man named Warren Buffett who at the age of 20 was scared to death of standing in front of people and speaking to them then discovered Dale Carnegie's public speaking course and it changed his life.

Not only did he develop the courage and ability to speak in front of groups of people, but he learned to make friends and motivate people. Warren considers his Carnegie education a life-changing event. and the highest diploma he had ever received. Once Warren felt comfortable speaking in public, he also became a devotee of Dale's philosophy on interacting with people, reading and rereading Carnegie's book, How to Win Friends and influence people, dozens of times, underlying and memorizing. complete passages the book became his bible for dealing with people and one of the cornerstones of his management philosophy if he was successful here is what a.l ulchi, the founder and president of Flight Safety International Inc, the leading training company in world aviation, told author Robert P Miles about Warren as his boss, leadership is really what a good manager is, the letters in the words represent the qualities a good manager should have l is loyalty and e is enthusiasm a means attitude and d is discipline e means, for example, you have to set a good example and r is for respect s represents erudition and h is for honesty i and p represent integrity and pride what I like most about Warren Buffett is that he has all these qualities.

We will examine Warren's leadership qualities and how Warren synthesized what he learned into a winning management formula and became not only the manager that other managers wanted to emulate but also the second richest man in the world to facilitate the learning process. We have broken down Warren's management philosophy into the following five segments or steps. each working with the others to create the perfect combination of number one management skills, choose the right business Warren has discovered that not all businesses are created equal, the first step to success is managing or working for the business right with the right economics in your favor, here's how to get ahead of the game from the beginning, whether you're an owner, manager or employee, number two, delegate authority, step two is Warren's unique take on delegation of authority, giving you has allowed Berkshire Hathaway to grow from a small failure. textile company in a giant multinational conglomerate number three find a manager with the right qualities the third step is to know the qualities it takes to run a great business here Warren looks for integrity, intelligence and passion for the business, which are also the qualities we need cultivate in ourselves to be successful managers number four motivate your workforce once the great business is found and the right manager is appointed Warren is tasked with motivating his managers to be all they can be so that the In the business, the manager and the employees can be as productive as possible.

Here we will spend time studying Warren's adaptation and expansion of Carnegie's methods. If there's a single skill a manager should be excellent at, it's motivating others to achieve. Warren developed a specific set of motivational skills that have inspired his managers to achieve one business success after another and helped him build Berkshire Hathaway into the $150 billion market cap company that is today's number five. of management axioms for different problems and, finally, there are a series of Buffett-specific management axioms. axioms for dealing with everything from managing leverage to handling dishonest employees to keeping costs down. At the end of the

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book, we will discuss some caveats to help you manage his daily life.

Success in business and life usually go hand in hand. Hand and Warren have some useful tips that will help us improve our life management skills, so without further ado, Warren Buffett's management

secrets

, the first step: choosing the right company to work for, working for the The right company can mean the difference between a successful, well-paying career or a life of drudgery. It can also mean the difference between a successful long-term investment and one that generates nothing. Warren has discovered that certain types of companies have such inherent business economics that even a bad manager will look good working for them. the types of companies you want to have and these are the types of companies we want to work for Warren has identified a number of characteristics that will help us identify these wonderful businesses, which is where we will begin chapter one, how to find the type of business that offers the greatest professional opportunities there is a big difference between the business that grows and requires a lot of capital to do it and the business that grows and does not require capital Warren Buffett this is one of the keys to understanding Warren's success as long-term investors and business managers, companies with superior economics working in their favor tend to burn much less capital than they earn, this is usually because they produce a branded product that never has to change or because they provide a key service that allows them charge higher prices that give them better profit margins with a branded product that never has to change a company does not have to spend large sums of money on research and development nor does it have to constantly re-equip its plant and equipment to implement design changes by Therefore, you can use the same plant and equipment over and over again year after year until the equipment eventually wears out.

All the money you save can be used to expand the business without having to burden the company with additional debt or the sale of new stock. The capital needed for growth is generated internally. All of this, of course, helps make the managers of these super companies look brilliant. An example: A company like Coca-Cola never has to spend billions of dollars redesigning its product or retooling its manufacturing plants to stay ahead. The competition leaves you with a lot of money to spend on fun things like buying other companies and paying big bonuses to your managers. On the other hand, a company like General Motors, which produces cars that have to change their style almost every year, has to spend billions. in new designs and retooling of their plants to keep their models competitive with the Fords and Toyotas of the world, which of these companies would you rather work for, the one that internally generates tons of excess cash or the one that internally burns tons of cash? the one with excess cash, of course, because that excess cash makes management look good, which means they can pay themselves generous bonuses at the end of the year and getting paid more money is always a good thing.

Companies with a Durable Competitive Advantage Warren believes that the best company to invest in or work for that offers the greatest opportunity for career advancement, job security, and long-term profits is a company that has what Warren calls a durable competitive advantage. These super companies have almost a blockade. their market, what this means to us is that these companies have products and services that never change, are easy to sell and own a piece of the consumer's mind, which equals higher profit margins and inventory turns, which It means that these companies are often awash in cash in On the other side of the coin there are companies with terrible economics that it is very difficult for us to make look good because they tend to cycles of boom and bust that turn you into a star in a moment and without a job the next, so the business that offers For us, the greatest employment advantage are those with some type of lasting competitive advantage that works in their favor.

Warren has found that these super companies come in three basic business models: one sells a single product to sell a single service, or three are the lowest. -buyer and seller cost of a product or service that the public constantly needs. Let's take a look at each of these three types of super businesses and discover the employment opportunities they offer to companies that sell a product that is unique in this world. of coca-cola pepsi wrigley hershey coors guinness craft american company johnson johnson proctor and gamble and philip morris through the process of customer need and experience and promotion through advertising, these companies have established the stories of their products in our minds and immediately we think about their products when we are going to satisfy a specific need we want to choose some gum you might think of wrigley you feel like having a cold beer after a hot day at work you might think of budweiser or coors from the last 284 years the irish on cool rainy At night I've thought about pints of Guinness and a warm fire in the local pub and Philip Morris has made a fortune selling Marlboro cigarettes around the world.

Warren likes to think that these companies own a piece of the consumer's mind, and when a company owns a piece of the consumer's mind, it never has to change its products, which, as you'll discover, is a good thing. He can also charge higher prices and sell more products, which means higher profit margins and greater inventory turnover, which equals a larger fund. line on their income statement, these companies are easy to identify because they have strong, consistent annual profits and little to no debt on their balance sheets. From an employment perspective, these special companies offer us the easiest opportunity to ascend to management super stardom in They are flush with cash, which means they can pay generous salaries and huge bonuses, they also have money to buy other businesses and create new businesses, which means there are plenty of opportunities for a young manager to excel, believe it or not, the things really do go better with a coke, including your career companies that sell a unique service this is the world of moody's h r block american express service master and wells fargo like lawyers and doctors these companies sell services that people need and are willing to pay for , but unlike lawyers and doctors these companies are specific institutional as opposed to specific people, when you think of doing your taxes, you think of hr block, you don't think of jack, the type of hr block that does your taxes, the economics of selling a unique service can be phenomenal, a company does not have to spend a lot of money on redesigning its products nor does it have to spend a fortune on building a production plant andstore their users and companies that sell unique services that own a piece of the consumer's mind can produce even better margins than companies that sell products Being a Manager in one of these companies can be a rewarding and well-paying career with few of the financial ups and downs that affect other companies.

Just compare the operating histories of HR Block and a company like GM, no matter how bad the recession is, people still need help filing their applications. taxes There is never a recession in the tax filing business, but with a company like GM the vagaries of the economy can be devastating in a short period of time HR Block's management team will never stay up at night worrying too much about the union demands debt or the purchasing whims of the public the same cannot be said of the management team of GM companies who are low cost buyers and sellers this is the world of walmart costco nebraska furniture mart fine jewelry of borsheim and north burlington from santa fe here big Margins are negotiated by volume and the increase in volume more than offsets the decrease in profit margins the key here is to be the low cost buyer, allowing you to obtain higher margins than your competitors and remain the low-cost seller of a product or service here reputation for having the best price in town attracts consumers in Omaha if you need a new stove for your home, go to Nebraska Furniture Mart for the best selection and the best price.

You want to ship your products nationwide. Burlington Northern can give you the best deal for your money. in a small town and want the best selection with the best prices, go to Walmart of the three business models we just discussed. The low-cost buyer and seller offers the fewest opportunities to advance your career. The constant stress of having to keep costs down makes it great. pressure on management and tends to keep salaries low, however, these companies still offer better employment and management opportunities than mediocre companies that do not fit into one of these three categories now that we know the general model of the perfect company to work for Let's look at your economic outlook a little closer so we can tell who's who and which companies are our tickets to that rewarding career.

We have selected three very simple economic tests to help determine whether the company in question is one of those special companies. companies with lasting competitive advantage chapter two three quick tests to identify the best company to work for earnings per share test number one one of the quickest ways to check the financials of a potential employer is to check the company's annual earnings per share figures . It is easy to do if the company is a publicly traded entity, difficult to do if it is not, while an annual per share figure cannot be used to identify a company with a durable competitive advantage per share, earnings per share.

A 10-year period can give us a very clear picture of whether or not the company has a long-term competitive advantage in its favor. What Warren is looking for is a picture of earnings per share over a 10-year period that shows consistency and an upward trend. Something that looks like this. in 99 to earnings per share of 1.30 cents 2000 eight 1.48 to one one dollar and sixty cents oh two one dollar and sixty-five cents oh three one dollar and ninety-five cents oh four two dollars and six cents oh five two dollars and seventeen cents oh six two dollars and thirty-seven cents oh seven two 2.68 08 2.95 this shows that the company has consistent earnings that show a long-term upward trend, which is an excellent sign that the company company in question has some type of long-term competitive advantage working in its favor and would potentially be a great company to work for consistent profits, they are usually a sign that the company is selling a product or combination of products that they do not need to go through. the costly process of changing the upward trend in profits.

It means that the company's economics are strong enough to allow it to make strategic expenditures to increase market share through advertising and an expansion of operations or increase earnings per share through the use of share buybacks from the companies. the ones that Warren stays away from and that likely offer poor job prospects have an erratic annual earnings outlook that looks like this 99 earnings per share 8.53 2000 a loss of 6.68 01 a loss of 1.77 02 3, 35 03 five dollars and three cents oh four six dollars and thirty-nine cents oh five a loss of six dollars and five cents oh six dollars and eighty-nine cents oh seven a loss of forty-five cents oh eight two dollars and fifty cents This shows a downward trend marked by losses which tells Warren that this company is in a fiercely competitive industry prone to booms and boom breaks demand increases which increases prices to meet demand the company increases production the which increases supply which increases costs and eventually leads to oversupply in the industry and falling prices the once profitable company now starts losing money until it has to cut production and costs there are thousands of companies like This and its erratic profits that in the boom years create the illusion that the company is a winner eventually turn it into a loser it is difficult to look like a managerial superstar when every few years the company is inherently terrible The economy destroys its results: the company with Steady profits that show an upward trend is the company that offers the best prospects for long-term profitable employment and a rewarding career, but so is the company with an erratic earnings outlook but quick to hire in the boom years. quick to lay off in lean years this boom and bust pattern makes the company difficult to work for as there is no long term stability in its economic picture number two the debt test another sign of a great business for which working is a company with the absence or low levels of long-term debt companies that make a lot of money do not need to have large debt loads since the surplus cash allows them to self-finance these are the companies that are good long-term employers because they have the cash to pay good salaries and the financial means to weather a recession with flying colors.

Debt-free companies are easy to spot as long as you can measure a particular company's debt load relative to its industry as a general rule. A debt load greater than five times its net earnings is a good indication that it is not a company with a lasting competitive advantage. High debt levels tell us that the business is in a highly competitive industry where constant change has created high demands for capital or two. the company is highly leveraged, what this means for us is that if we are going to work for one of these companies, the cost of servicing the debt will eat up any excess cash and leave little for salary increases and bonuses, it also means that there will be little excess. capital to grow the business or acquire new business, meaning there will be little growth in management opportunities and if the economy goes into recession, these will be the first companies to lay off employees in an attempt to cut costs before they fall not exactly at the expected level. company you want to bet your career on number three the gross margin test another way to tell if a company has a lasting competitive advantage that would help make it a great company to work for is to look at the company's gross profit margin for To determine the company's gross profit margin, we have to look at the company's income statement, which is a financial report for a period of time that shows whether the company made or lost money, specifically we have to take the company's revenue. and subtract the company's cost of goods sold which will give us the company's gross profit now if we divide the company's gross profit by its revenue we will get the company's gross profit margin let's take a closer look at the state of results income ten thousand cost of goods sold minus six thousand gross profit four thousand now if we subtract from the total income of the company the amount reported as cost of goods sold we obtain the reported gross profit of the company as an example, the total income of 10 million minus the cost of goods sold of 6 million equals a gross profit of 4 million and then we get the profit margin we take the gross profit of 4,000 divided by the revenue 10,000, which equals the gross profit margin, which equals at 40 percent Warren is looking for companies that have some kind of lasting competitive advantage, business that he can benefit from in the long term, which makes them fantastic companies to work for.

What he has discovered is that companies that have excellent long-term economics term working in their favor tend to have consistently higher gross profit margins than those that do not allow us to show you the gross profit margin of the companies Warren already owns. Identified as having a durable competitive advantage, Coca-Cola displays a consistent gross profit margin of 60 percent or better, Moody's Bond Rating Company 73 percent, Burlington's Northern Railroad 61, and Wrigley's Very Chewy Gum 51 contrast these excellent businesses with several companies that we know have bad long-term economics, such as the in and out of bankruptcy of United Airlines, which shows a gross profit margin of 14 percent, the troubled automaker General Motors, which reaches a week, 21 percent, once-troubled but now profitable U.S. steel at a not-so-strong price. 17 and a Goodyear tire that works in any weather but with bad economy stuck at a not very impressive 20 percent in the tech world that Field Warren stays away from because he doesn't understand it.

Microsoft shows a consistent gross profit margin of 79 percent, while Apple. reaches 33 percent, these figures indicate that Microsoft produces better operating systems and software at affordable prices than Apple does by selling hardware and services. What creates a high gross profit margin is the company's lasting competitive advantage. It allows companies the freedom to properly price products and services. Above the cost of goods sold without a competitive advantage, companies have to compete by lowering the price of the product or service they sell, which of course reduces their profit margins and therefore their profitability. It also reduces their ability to raise salaries and give large bonuses and decreases the company's ability to spend capital on new businesses and survive a recession.

In summary, there are other tests we can perform to help us determine whether the company in question has a lasting competitive advantage, and we describe those tests in great detail. detail in our book Warren Buffett and the Interpretation of Financial Statements, but for the quick and dirty, the three tests described in this chapter will be very useful when we need to evaluate whether or not the company offering you a job is one of those large companies that will take you on the path to a successful and highly rewarding career or if it is a mediocre business that will enslave you to a life of low wages, few opportunities and little to no job security while you are within the realm of possibilities of a large company . over time it becomes a mediocre company, this happened to the newspaper industry, it is very rare for a mediocre company to become a great one, so if you find yourself working for a company with inherently poor economics, it is Better get out now.

Instead of sitting around year after year waiting for things to change, step two, Delegate Warren discovered that as Berkshire grew bigger and bigger and became involved in more and more diverse businesses, delegating authority became a necessity not only for his sanity but also to ensure that their companies were run competently and that managers were happy leading them If there is a single management skill that is uniquely used it is their willingness to delegate authority far beyond the limits with which most CEOs would feel comfortable. Let's explore Warren's philosophy on delegation and how it has allowed him to grow Berkshire from a small regional textile manufacturer to the giant multinational conglomerate it has become today chapter 3 rules for delegating authority that we delegate almost to the point of abdicating Warren Buffett Warren learned that to manage and grow a business one must learn the art of delegating authority, the natural inclination is to try to control every event and the people involved to micromanage the business of the task, but micromanaging too many tasks or businesses leads to too many balls in the air at once and if you drop one, you drop them all.negligence, while delegating to a competent manager who focuses on a single job means a deeper understanding of the task and more careful execution of the work.

Warren owns more than 88 diverse companies and has entrusted the management of these companies to 88 highly managed companies from competent CEOs Berkshire companies such as John's Manville Benjamin Moore Fruit of the Loom Clayton Homes and Jordan's Furniture are led by CEOs who have

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control about business when berkshire bought forest river

warren

told founder and ceo peter legal not to expect to hear from more than once a year,

warren

goes so far as to tell the CEOs of berkshire companies not to write anything special for him when Mclean Company CEO Grady Rozier called him to request approval to purchase a pair of new airplanes from the company.

Warren responded that that is his decision that it is his company to run Warren feels that it would be crazy for him to think that he himself could competently manage each and every one of these businesses to competently get the job done Warren delegates not just one task but the entire job, as he says he delegates almost to the point of abdication Warren has developed a set of rules to help you success

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y delegate rule number one Every business culture is unique, from the smallest companies to the largest corporations As a manager, Warren has learned that he cannot perform these highly specialized skills even remotely as well as they do.

He feels that his employees are the experts and should be allowed to do what they do well without his interference. He also feels that if he has any job as a manager it is to inspire his employees to greatness in their jobs think cheerleader not slave rule number two Warren has discovered that competent managers like to be left alone to run their businesses as as they see fit Warren encourages his managers to continue to think of their businesses as their own, the result is that they work harder and make sure the business does well, it's a matter of pride, rule number three Warren realizes that In order to fully delegate authority to work it is necessary.

Not only do managers need to be hard-working, passionate and intelligent about their businesses, but they must also have high integrity; In other words, they must be as honest as the day. If they are not honest, they could end up using their abilities. hardworking, passionate and smart ways to rob us blind In short, Warren's delegation rules are pretty simple, each and every business is unique, your employees are better at doing their individual jobs than you if we want the business to grow we must Delegating Authority Managers like to be left alone to run their businesses and the managers we hire must be hardworking, intelligent and most importantly honest or as the late Great Berkshire manager Mrs B once said about the secret to your success in the furniture business sell cheap and tell the truth step three find the right manager for the job once you find or acquire the right business and understand the need to delegate, the next job is to hire the right staff manager for Warren, the characteristics of the right manager happen to be the management qualities we need to cultivate in ourselves, let's take a look at what those characteristics are.

Chapter four, where Warren begins his search for the right manager. Management changes, like marital changes, are painful. Risky and time-consuming Warren Buffett, this is a lesson Warren learned the hard way by purchasing businesses that were available at a bargain price but were poorly managed. His initial investment in manufacturing Dempster mills, which we will discuss in just a minute, is the perfect option. example of having to replace management several times before finding the right manager it was painful yes it took a long time yes it was expensive very it was necessary definitely the key to making management changes is to ask if it is absolutely necessary if the answer is no we are crazy about risk financial ruin by hiring someone completely new to take over, but if the company is losing money and we think it's because of the manager and not the underlying economics of the company, then it's definitely time for a change in management Warren tries to avoid management changes when announcing new companies to buy through investment bankers or in his annual letter to Berkshire shareholders.

He insists that the company have competent management already in place. He requires the key managers of each of the companies. he has to write her a letter telling her who in the company would succeed them if they died tomorrow. These letters are updated each year this way, if something happens to one of your managers, you won't waste time trying to find a replacement. Warren's replacement gets a manager who is already familiar with the business and was hand-picked by the person who I better understood the company, its people, its products and its customers. If Warren has to look for a manager outside the company, he usually turns to people he's already worked with. who have a proven track record or he will ask his business partners for a recommendation.

This brings us to the brief but notable history of Dempster mill manufacturing and the notable hairy bottle Dempster mill manufacturing was a windmill and water irrigation company in Nebraska that Warren purchased. two, because the shares were selling at 25 percent of their book value. Once he owned shares in the company and took a seat on its board of directors, he realized that the reason the company was not doing very well was that it was poorly managed. So he convinced the board members to bring in a new manager, whom they elected. The new manager turned out to be even more disastrous than the manager they had replaced in his desperation.

Warren turned to his friend and councilor Charlie Munger and asked if Charlie knew anything. management talent that could save the day charlie suggested the name of a man whom Warren would later refer to as the notable hairy bottle Harry was what is known as a turnaround artist a manager remarkably skilled at fixing failing businesses at Warren's invitation And for fifty thousand dollar signing bonus Harry moved from warm, sunny California to bitterly cold Nebraska, where he took over as the new CEO of Dempster. The first thing Harry did was change the price of the parts and spare parts inventory.

Dempster's products needed constant maintenance, which meant that the company did a big business in spare parts. Some of the parts Dempster used could be bought at any hardware store, but some were unique to Dempster and couldn't be bought anywhere else. . One of the mistakes Harry discovered was that Dempster had been marking all of his pieces. At the 40 percent standard for both common and unique pieces, Harry tripled the price of the unique pieces that Dempster had a monopoly on and reduced inventory levels for common pieces, thus increasing revenue and freeing up capital by the end of anus.

Dempster was back in the black and on track to become one of Warren's winning investments. Twenty years later, Warren had another management problem with one of Berkshire Hathaway's smaller manufacturing companies and guess who he called the notable hairy bottle. Of course, the lesson here is that you change managers only when necessary. promote from within if possible and if you can't look for talent with a proven track record when all else fails, call hairy bottle extraordinaire 5, warren's secret victor or victim to choose a leader of the pack, would you rather be the best of the world? lover and everyone thinks you are the worst lover in the world or would you rather be the worst lover in the world and everyone thinks you are the best lover in the world Warren Buffett Warren theorizes that all people have an internal or external scorecard to which we are faithful ourselves or conform to what we believe the world wants us to be a true leader follows the beat of his own drum while a bureaucrat submits to the perceived desires of others, it is difficult to be alone when the winds of popular opinion They are against Warren's ability to do this has made him super rich.

He buys stocks when everyone else is afraid and sells when everyone else is excited. He has spent his life going against the pack. Free and independent thinkers like Warren Buffett are never victims, they are masters of their own affairs. own destiny when discussing the difference between the winner and victim mentality psychologists talk about locus of control if you have an internal locus of control you blame yourself when something goes wrong you believe that you are in control of your destiny and that you are in control of the outcome and If you fail it is because of your own actions and no one else's, but if you have an external locus of control and something goes wrong, you blame everyone but yourself.

When he was young, Warren was deeply influenced by his father Howard, who had a strong internal influence. locus of control when the great depression hit howard started a new successful business when he didn't agree with what was happening in the government he got elected to congress this taught warren that he, not the world, had the control of his life and that he was not the world. would determine what your life would be like having an internal locus of control it's not always easy when you win it's you who wins but when you lose it's you who loses there is no scapegoat anyone but yourself to blame who may be crushing warren's failed investments in two Irish banks and his overpayment for conoco phillips are his failures and his alone and he learned from them, but he makes a point of not dwelling too much on his failures by not dwelling on them, he avoids the crippling consequences. effect that failure can bring to someone with an internal locus of control the big lesson here is that people with an internal locus of control take responsibility for their failures and in the process learn from their mistakes they are in control of themselves they have the control of their world see problems as challenges that must be conquered think of bill gates people with external locus of control do not believe they have the power to solve their problems believe they are victims of circumstances beyond their control think of wall street Which one do you think leads to wealth and greatness?

What kind of person would have the strength to lead a company or nation through difficult times? Are we winners or victims? Victors are great managers and leaders because they can take responsibility and solve problems, on the other hand, victims. They're too busy making excuses and blaming the world to take on challenges and solve problems Chapter 6 Working at a job you love There comes a time when you have to start doing what you want Taking a job you love You'll jump out of bed in In the morning I think You're crazy if you keep taking jobs you don't like because you think they'll look good on your resume.

Isn't it a bit like saving sex for your old age? Warren Buffett on the hunt. In pursuit of wealth, we often end up in jobs or professions we don't like, but we stay in them day after day, year after year, until we finally run out of time. We fool ourselves into believing that there will come a day when we will finally do it. what we dream of doing while we spend a life in misery that we bring home each day to share with our loved ones this type of suffering in the name of a book usually begins early in life and is often based on need, however, to Sometimes it is The foundation is nothing but greed.

Warren believes that not doing what we love in the name of greed is very poor management of our lives, it makes work hard, which drags us down and destroys our spirit, and even though we are making a lot of money, we spend more than nine hours at work, we are miserable in the business world, the people who are most successful are those who do what they love, money is not what drives them, what drives them is the same thing that drives a great gamer or a great musician a love for what he does whether it is a programmer a salesman a carpenter a nurse a butcher a chef a policeman a doctor or a lawyer the people who reach the top are those who love what they do and are generally the People who make more money in their profession, loving what they do and making good money almost always go hand in hand.

Warren believes that when we hire people to work for us we should try to find people who like what we hire them to do. These are the people who will take pride in their work, inspire their coworkers to greatness, and become the driving force behind the business. They are also the people who have made men like Warren look like geniuses at managing our lives. The rule is love. what you do in managing our business the rule is to hire people who love what they doboth will take you to gold chapter 7 build a winning sales team I don't want to be on the other side of the customer's table, I never sold anything I didn't believe in myself or use myself Warren Buffett Warren learned from the beginning That the best salespeople are those who believe in their products and are passionate about the products they sell.

If someone believes in and is passionate about the products they sell, you can bet that they are very interested in everything related to that product, from the material of the what it is made of down to how it is made and what its best uses are. Even more importantly, the seller will know the best uses. the product such knowledge impresses any customer this is a quality Warren looks for in his managers people who believe in their products and business so much that they love coming to work he doesn't like hiring managers who are only interested in making money and who would prefer be elsewhere, many of Warren's top managers have spent the vast majority of their working lives at the same company and continue to work for them even though they are many times more millionaires than Buffalo News editor Stan Lipsy, who has been in the company.

For more than 30 years, CEO Irv Blumkin, now in his 50s, has been on the Nebraska Furniture Market payroll since he was a teenager. Both super managers are rich enough to retire in the morning, but they still show up to work and the reason I love what they do, the lesson here is this: if we want to build a winning sales team, we must find people who They create and are passionate about the products we ask them to sell. A salesperson's passion for the products he sells is something. that warren has learned that he can rely on the obsession for chapter 8 our prototype of occupational fervor is the catholic taylor who used his small savings of many years to finance a pilgrimage to the vatican when he returned to his parish he held a special meeting to obtain his information first-hand account of the Pope, tell us, said the faithful enthusiasts, what kind of guy our hero is without wasting words.

He is a 44-year-old Warren Buffett in Warren's world. The perfect manager is someone who gets up in the morning thinking about the business and in the morning. night is dreaming. about the business while saying that obsession is the price of perfection Warren's obsession led him to memorize Moody's stock manual starting at a and working his way up to z one of his favorite investors of all time was a guy with very little education who became so obsessed with water companies that he could tell you how much money they made every time someone flushed the toilet, guess how much that guy made with his millions investing in water companies, of course, and it's an obsession that Warren looks for in his employees.

He once said that if he could. Ask his interviewees for a job at Berkshire just one question: how obsessed they are with what they do. Her archetype of the perfect manager was the famous Mrs. B, who founded and ran the Nebraska Furniture Mart with her family until she reached maturity. age 104 years. There was no way to keep the old lady away from the store, who was the love of her life for the 60+ years she ran the business, she only took one vacation and was miserable the entire time because she was away from her shop. She said that when she went home at night she couldn't wait for morning to come so she could go back to her clients.

Her only hobby was driving around Omaha checking on the competition. All of Warren's top managers are men and women obsessed with Tony Nice CEO. from Geico He has worked for the company since 1961 and has no idea what he would do if he ever retired. Speaking about A.l Uchi, founder and president of flight safety, Warren said Al understood what flight safety was about, he understood what flight safety was about and he could tell it. He loved the business the first question I always ask myself about someone in his position is do they love money or love the business but with all the money it is totally secondary he loves the business and that's what I need because the next day buy a company, if they only love money, they leave.

The question Warren uses to determine a manager's passion for the business is to find out his initial drive to be in the business. He says we can tell more about a manager's success whether or not he had a lemonade. being a child that where they went to college an early love of business equals later in life being successful in business in Warren's world it's not so much about how smart we are but how obsessed we are with how much that we love what we are doing if it turns out that we are too smart that is just the icing on the obsessively delicious cake chapter 9 the power of honesty we also believe that candor benefits us as managers the CEO who deceives others in public may eventually deceive himself himself privately Warren Buffett Warren says that a manager or employee who is honest with others about their mistakes is more likely to learn from them when a manager or employee ignores their mistakes or is always trying to blame someone or something else for his own mistakes, then he is more likely to do it. lying to yourself about other important things too Warren has found this to be especially true in all matters of accounting and believes that the willingness to play with one set of numbers will eventually lead to the willingness to misrepresent all the numbers or, as Warren puts it , the managers. those who always promise to make the numbers at some point will be tempted to make the numbers Warren has an underlying theme of truthfulness in his personal and business life which he describes as one of the key character traits to aspire to, as he says no I don't want to be in business with people who need a contract to be motivated to perform in the business world.

A manager who is as honest as day. As long as the money that is already in the bank. Chapter 10 Manage costs. The really good business manager. He doesn't wake up in the morning and say this is the day I'm going to cut costs, any more than he wakes up and decides to practice Warren Buffett breathing. Profits are the lifeblood of a business. Lack of profits is the death of a business. The only way to make profits in business is to have lower costs than the prices you charge for the products you sell. The difference between the two is called profit margin.

There is no other way to win. money also there is no other equation make profit or not and if you don't make profit you won't stay in business for long if you make a lot of profit you can do more than just make a living you can become rich as a business manager We have two main objectives: Inspire our strength sales team to sell as much of the product as possible at the highest possible price and to inspire our manufacturing and purchasing teams to produce or purchase the products we sell at the lowest possible price. It takes two to tango and It takes two to make a profit.

The task of keeping costs low is the most important because it determines the price of the product. Lower costs mean we can sell the product at a lower price, which will make the product more desirable and easier to sell. To determine whether your managers are going to be cost conscious is to look at how they handle seemingly small costs. Warren says that if managers aren't disciplined in the small things, they probably will be disciplined in the big things, too. He likes to tell others. Story of Benjamin Rosner, the owner of Associated Cotton Stores, who was so fanatical about keeping costs down that he once counted the leaves on a roll of toilet paper to make sure his supplier wouldn't cheat him.

Warren also likes to tell us about Tom Murphy, CEO. of communications of the capital cities, that he was so conscious of the costs that when he had the office building painted he did not paint the back wall because no one would see it. Tom considered public relations and legal departments to be frivolous expenses and thought that if and when these services were needed, freelancers could be hired at a fraction of the cost and when he merged the capitals with the abc television network, the first thing he What got rid of was ABC's private dining room. Warren loved Tom.

Another aspect of the cost reduction equation has to do with personal savings if we are in a forty percent tax bracket we have to earn ten dollars to have six dollars to spend so if we reduce our living costs by six dollars, it is actually the same as earning ten dollars and saving six dollars, which you can then invest as benjamin franklin said if you know how to spend less than what you get you have the philosopher's stone the philosopher's stone was a tool that alchemists used to convert the Lead into gold In the early part of Warren's life he was a fan of keeping his living costs down which is why he drove an old VW Beetle long after he became a multi-millionaire.

The money he had saved by driving a cheap car gave him more money to invest and become even richer. The bottom line here is this: when Warren is looking for a manager for himself. You want someone who is cost conscious as a way of life, not only when the business is starting to fail, reducing costs is the fastest and easiest way to increase the results of both our business and our personal fortune, which it means it's the easiest way to get rich and easy is always a good thing when it comes to making money chapter 11 have an eye for the long term there really is a lot of overlap between managing and investing being a manager has made me a better investor and being an investor it has made me a better manager Warren Buffett Warren is a long-term investor.

His favorite holding period for companies with exceptional economics working in his favor is forever. This long-term perspective is the source that produced his great wealth, but most business managers tend to have it for a while. horizon of less than a year they live in a world defined by quarterly and annual results if they exceed quarterly or annual projections they will get big bonuses and promotions fail to generate quarterly or annual projections and they start rolling this tends to keep management focused In the In the short term, this short-term focus almost kills any long-term planning on the part of management.

Managers are forced to make short-term numbers at the expense of long-term planning. They often have no plans to exploit future opportunities nor do they do so. they plan ahead for a possible recession this is reactive management as opposed to the proactive management practiced by Warren Warren learned from investing that the long-term perspective that had served him so well personally would also serve him in business one of the first things Warren asks his managers when they join his company to stop worrying about the short-term ups and downs of the business and focus on making the business strong and viable in the long term.

Another lesson Warren learned is that any intense focus by any management on the short term tends to turn those managers into poor allocators of capital, which creates two very big problems: The first is that management can continue to waste good money after a while. mediocre business long after the time has come to use that capital elsewhere; The second is that when management attempts to allocate capital away from its core business, it almost always ends up buying a short-sighted promise of prosperity at an inflated price. He often cites Coca-Cola's failed foray into the movie business as a perfect example of a big company blowing money after a bad one.

When Warren bought Berkshire Hathaway, it was a mediocre business that spent more money than it made in a desperate attempt. to compete with foreign textile manufacturers after Warren acquired control. He had the insight to see that it was a dying business, so he stopped it. spent Berkshire's working capital on the textile business and used it to acquire an insurance company that is a better business from a long-term perspective, how did he know that that textile business was not going to work and that the insurance was going to be Better Business Warren had spent a lot of time studying a lot of business and knew what a great long-term business looked like.

Thus he also knew that the textile company was a terrible business and that it did not matter how much money he threw away. In that case, his underlying economics would never improve; Ultimately, Berkshire had to close its textile operations, but by then its insurance operations were on track to help Berkshire become the financial powerhouse it is today. The managers running Berkshire's textile operations would have spent the company's last cent trying to remain competitive with foreign manufacturers, it was fortunate for Berkshire shareholders that Warren had the clarity of vision to see what the future of the business would look like. textile and the foresight to invest the company's working capital in a company that had much better long-term prospects, Warren ultimately learned that when looking for a great manager, you alsoseeks a great investor whose responsibility is to invest the company's money in people, products and new businesses, always with the long-term perspective in mind.

Chapter 12 How to Determine Salaries If you have a great coach, you want to pay them very well. Warren Buffett. Great coaches are like great football coaches. They are few and far between. How do you measure if a coach is excellent or not? Not all companies are the same. Some companies are mediocre. exceptional economics, while others have exceptional economics, those with exceptional economics working in their favor are often the type of companies that make even a lousy manager look good on the other side, even an exceptional manager may not look too spectacular if you are running a mediocre business.

How can we differentiate? Warren examines how well a manager is doing by measuring the manager's performance compared to others in his industry, for example, if we own a company that earns 20 on shareholders' equity, we might think it is excellent and give our manager a great reward. bonus check at the end of the year, however, in reality we may not be doing as well as other companies in our industry. Do we pay our manager a bonus for giving us a mediocre result compared to others in our own industry? For Warren, the answer is no. unexceptional performance in an exceptional business does not inspire you to hand out exceptional bonuses at the end of the year;

The opposite is true for a business with a mediocre economy; If our business earns five percent on capital, we might correctly conclude that, compared to all other businesses. is on the low end, but when compared to other companies within our own industry, we might find that it is on the high end, which would indicate that our manager keeps us ahead and should be rewarded handsomely for that. a big believer in performance-based pay, as long as it is based on the value added by the manager and not the inherent economics of the business. In Warren's world, bonuses are paid according to how much the manager actually improves the underlying economics of the business, not how much the underlying economics improves the manager's perceived performance step 4 motivate your workforce Warren realized from the principle that if you delegated to the point of abdication, motivating your managers to achieve exceptional levels of performance would be your primary function once you found the right business and appointed the right managers all that was left for you to do was motivate your managers to be all they can be In this part of the audiobook we present the management motivation skills that Warren uses we explain what he learned from Carnegie and others and how he adapted this to a winning management style from the first impression to the use of praise, the understanding the dangers of using criticism and the subtle use of suggestion Warren is masterful at inspiring and influencing his managers.

We begin by examining your use of first impression to set direction. stage chapter 13 make a good first impression when you meet someone for the first time begin the meeting in a friendly manner beryl raff was a successful dallas jewelry executive who ran j.c penney's jewelry retail division and then in the spring of 2009 , received a call from a friend in the business asking if she would be interested in interviewing for the CEO position of Helzberg Diamond Shops of Berkshire. Helzberg's is a 90-year-old chain of 240 jewelry stores and the life's work of diamond king Barnet Helzberg before he sold to Berkshire.

Barrel had long admired Warren and his company, Berkshire Hathaway, knew the quality of the people who worked for him, the multitude of great companies he owned, and his stellar reputation as an enlightened CEO, knew that his managers praised him and regarded him. the opportunity to work for a top tier company could be the opportunity of a lifetime just talking to Warren would be a career highlight. What he didn't expect was to see Warren picking her up at the airport himself in his gold Cadillac, as nervous as a barrel. Warren immediately calmed her down. He found him witty and charming after spending a couple of hours in his office answering questions about his vision for the jewelry business.

Warren took her to a delicious lunch at her country club. He gave her a tour of her hometown and then offered her the job, she thought about it for a couple of days and then accepted and has been happy ever since. Barrow says that even after just a few months on the job she already feels like an adopted member of the extended Warren family. Warren recognizes the importance. To make the first meetings friendly, he began her meeting with Beryl by meeting her and offering her a ride. He was light, funny, friendly and eager to put her at ease.

He took her to lunch and listened to her. The first impression of her. This is a guy I would love. to work and Warren continues to make her feel like a special member of the Berkshire Hathaway family. She has said that her biggest fear is disappointing him. Imagine if Warren had done the complete opposite. What if he hadn't picked Beryl up at the airport? If he had instead taken a taxi, imagine he didn't even take her to lunch or listen to her. Her first impression might have been that Warren was an aloof billionaire who only cared about whether she made him more money or not, the kind of boss she would make.

He doesn't like to work and if that had been the case he probably wouldn't have taken the job. The rule is simple. If you want to get your way, start your encounters with other people in a friendly way, as Warren has discovered, it's the only way to do it. pay chapter 14 the power of praise we all have a deep and honest need to be appreciated warren recognizes that we all have the need to feel important it's almost biological the first american psychologist and philosopher william james once said that the deepest principle in nature human is the need to be appreciated, this is not lost on Warren, one of the first great managers that Warren studied was Charles Schwab, the former director of the American steel company Schwab, he was the first superstar manager and the first CEO in receive a payment of one million dollars a year.

Schwab, the most revered manager of his day, was not his knowledge of the steel industry, which even he admitted was not extensive, but rather his ability to inspire enthusiasm in his employees. . He did it through appreciation and encouragement. Schwab said I consider my ability to spark enthusiasm. Being my greatest asset and the way to develop the best in a person is through appreciation and encouragement. There is nothing that kills a person's ambitions like criticism from superiors. I never criticize anyone. I believe in giving people incentives to work. so I'm eager to praise but I hate to find fault if I like something I'm sincere in my gratitude and sincere in my praise Schwab noticed that his boss Andrew Carnegie had even gone so far as to praise his employees both in public and in private Warren followed Warren's advice schwab as if it were a creed praising employees and managers for the little things and praising them for the big ones.

He is a consummate entertainer and his employees' biggest fan never misses an opportunity to praise his managers in private or at annual meetings. Berkshire and in his annual reports Warren learned from Schwab that if he praised people for the little things, they would give him even bigger things to praise them later because Warren's praise really is the gift that keeps giving Chapter 15 the power it gives the reputation. The employees have an excellent reputation that you should live up to and praise them whenever you can. Warren learned the importance of giving his employees an excellent reputation to live up to from Carnegie, who emphasized this point to his readers by telling the following story: A manager worked with a long-time trusted older employee who had become bored and become indifferent to his job, resulting in a decrease in the worker's skill and productivity, the manager reviewed his options, he could fire the senior employee, but would then have to replace him, he could threaten him with being fired, but the worker would probably be resentful with him, he chose to speak with the employee individually. friend a friend in the course of the conversation told the worker that he was one of his best employees and that he was an inspiration to other employees and that many customers in the past had praised his skill, but lately he said that the employee's work had failed .

The manager said he was worried about him and wondered if there was anything he could do to help. How did the worker respond when he realized he had an excellent reputation to maintain? He stopped doing shoddy work, increased the level of his production, and became the worker others admired. Warren praises his managers as the best in the business and He points out this admiration in his annual letters to Berkshire shareholders, mentions it at Berkshire's annual meeting, and talks about it when interviewed by the press. He never misses an opportunity to give his managers an excellent reputation that they must live up to, which is easy for him to do since they are the best in the business.

Bono Theory's advice to Warren on how to give his manager an excellent reputation to live up to fits with the advice he gave to rock star Bono, who sought Warren's advice on how to inspire Americans to They will help him in his battle against poverty in Africa. Warren told Don Don't appeal to the conscience of America, appeal to the greatness of America and you will get the job done. Appealing to a person's conscience means subtly appealing to his sense of right or wrong. What kind of person are you if you don't? We want to help the hungry poor in Africa.

This plays with our feeling of guilt. We don't like people who make us feel guilty. In fact, we spend most of our time trying to avoid them. Warren advised Bono to speak to the guilt of the American people. Greatness, imagine how a statement like this, which plays on people's guilt, would have made additional American listeners feel like all these poor people are starving in Africa. You're the richest nation in the world and you're just going to sit there and let them starve? Compare it with you. You are the smartest nation on Earth, you won World War II against impossible odds and you pierced the skies to put a man on the moon.

When I was faced with the tremendous problem of helping the poor lost souls suffering in Africa I thought, who should I go? Then I had an epiphany. I must turn to the greatest nation in the world. The only town that can solve really difficult problems. The only nation that can achieve the impossible. Warren advised Bono to appeal to America's sense of pride, its sense of greatness, its excellent reputation. give a person or a nation a sterling reputation to live up to and they will live up to it make them feel guilty and ashamed and they will disappoint you using blame is not productive appealing to the greatness of others is what works for warren and it will work for you most importantly works for the employees and managers you are trying to inspire chapter 16 the dangers of criticism using criticism to motivate is useless because it puts the person on the defensive hurts his precious pride and hurts his sense of importance and wake up Resentment Warren has discovered that unsolicited criticism is something we all hate to hear.

Generates resentment. It can drive us out of our parents' home when we are young adults. It has been the cause of many failed marriages. However, many of us make the mistake of giving unsolicited criticism. In others, especially in the workplace, Warren learned long ago that criticism is not the way to inspire your managers, does not create lasting change, and destroys any type of productive working relationship instead of criticizing your managers when they make mistakes. , Warren tries to understand. what went wrong and why there was an error in judgment, he pays attention to his managers and their work environments and imagines himself in their shoes and, as long as his managers take smart risks, he allows them the luxury of making the occasional mistake. a look at warren in action david sokol is one of warren's top managers who runs the berkshire american energy company david once spent $360 million on a zinc project that failed and had to be written off as a totally expected loss by the one that warren fired him his colossal error in judgment instead of firing him or reprimanding him with criticism warning upon hearing the bad news he simply told david we all make mistakes warren went on to say that he had made even bigger mistakes during his tenure at the helm of berkshire hathaway and He told David to learn from his mistake but not to dwell on it.

David thinks it's the world of Warren and has never made a similar mistake; On the contrary, during the last nine years he has made aBrilliant job leading Berkshire's energy operations into some of the most profitable in the world. industry, but if Warren had rebuked him, mocked him for his stupidity and folly, and criticized him, David would have come to despise Warren, and it is doubtful that he would have been inspired to stay and make Warren's energy the center of United States in the money-making powerhouse that is today praise by name criticize the category Warren knows that praise and criticism are two of the most important tools a manager has at his disposal if used correctly these tools can inspire employees to work hard be creative and achieve great success if used incorrectly they can destroy drives ambition and creativity and almost certainly guarantee failure.

Warren feels that learning to effectively use praise and criticism is a manager's primary motivational task. A manager who fully understands this challenge has the ability to motivate others toward greatness, regardless of whether the task is so motivating. a production team to be more efficient and effective or getting his own children to do their homework Warren is a genius at using praise and criticism his rule is simple praise by name criticize by category let's take a look at what he means we all crave Praise nothing makes us feel better about ourselves or inspires us to do better from early childhood, when we compete to earn praise from our parents, then we seek it from our teachers, and in the workplace we seek it from our boss, We need praise, he says.

He tells us that we are on the right path and inspires us to stay on that path and do even better. Nobody likes criticism. Nothing can make us feel more bad about ourselves than being criticized for something we did or didn't do. Nothing will inspire us. Less we hate hearing criticism as children and we hate hearing it as adults. Criticism means that we were wrong, that this is not the right path for us, that we should stop what we are doing and try again or give up and do more. We like people who criticize us, which means we don't listen to them, we exclude them.

Nothing will win you friends faster than praise and nothing will make you enemies faster than criticism. Many managers never learn how praise and criticism interact. It's one of Warren's biggest management

secrets

. He uses both praise and criticism to inspire a person to achieve more. Warren sets the stage with praise, praising both small and large achievements. He never misses an opportunity to praise his managers and he is a master at remembering. names and praising people by name why because nothing is sweeter to another person than the sound of your own name read an annual report written by Warren Buffett and you will see that it is loaded with praise for his managers who are singled out by name . is generous in spreading praise around Warren, elevates his managers to a high position and makes them feel special by continuing to praise them in person and in print, the job becomes more than just a place to make money, it becomes a place to increase self-esteem.

Once Warren's managers respect and trust him and believe that he has their best interests at heart, he is in a much better position to offer them advice. Here he also employs a bit of magic and never criticizes the manager directly when a manager Warren has built with. A strong relationship asks for his opinion on a business idea and Warren doesn't like it, he will make a subtle suggestion letting the manager draw his own conclusion. A classic, tired response would be to acknowledge the manager's point and say yes. tempting and then offer a story in which Warren or another businessman had a similar idea that led to disaster, thus leaving the manager to draw his own conclusion from him.

Warren applies the same theory when he talks about the world in general. He is quick to praise an individual banker for his integrity but if he is unhappy with the banker he will only criticize the banking profession as a whole, the banker saves face and Warren gets his point across without creating an enemy, as Warren says, praise the person, criticize the category if you must criticize people. praise them personally first, although Warren realizes that personal criticism is poisonous. He is also a realist. He recognizes that in some cases criticism is inevitable when personal criticism is necessary.

Follow the advice of Carnegie, who suggested that one should complement the person. The first criticism alone is almost always rejected outright, however, when the criticism is preceded by praise, the listener is more accepting of the suggestion. someone who gives a compliment is perceived as a friend. someone we like. The people we like are those whose opinions matter to us. a compliment builds trust. necessary for constructive criticism to be heard and acted upon Warren used the praise model of criticism to appease Berkshire shareholders who were angry with him for investing in petrochina because petrochina's parent company, the chinese national oil corporation, cnpc, was making investments in Sudan after shareholders had made their protests.

Warren began by praising his social conscience and appreciation of the seriousness of the situation in the Sudan, then criticized his position, arguing that since Petrochina was a subsidiary of CNPC, Berkshire had no way to influence it. Below are some general examples. from the praise critique model, a business, johnny, you are doing a wonderful job handling the mail, your great improvement over the last guy we had at this job, I am very happy with your performance, however, your approach to handling the Customer complaints are still a bit difficult. Can I offer you some suggestions number two, family?

I can see from their report card that they are doing very well in spelling, which is fantastic. I am very proud of you for doing so well, however it seems that you are having some difficulties with Math. I had that problem when I was your age and I was wondering if you might be open to me helping you overcome this problem. The rule here is pretty simple: avoid using criticism like the plague, but when you have to. praise the person first and then criticize the category if that doesn't work praise the person first before criticizing them directly this approach works for warren and will work for anyone who is willing to open the door first with sweet praise chapter 17 how to win an argument for winning an argument sometimes you have to lose Warren learned early on that the way to win an argument was to not have one in the first place, since openly correcting someone could cause them to lose face and in the process the person could end up resentful. with the.

Warren learned from Carnegie that instead of disagreeing with someone, it was better to agree with them. so that you can gain the person's trust and in the process get them to listen to your ideas. Warren fully embraces this philosophy and is famous for avoiding conflict and arguments. Warren is also known for listening to people and respecting their opinions even when they are contrary to his own, but it is his ability to agree with the other person's argument that allows others to relax and listen to Warren's position, and Warren knows that getting the other person to listen to you is the first step to winning any argument.

An example. If young Warren, as a securities salesman, were selling Geico stock and went to visit a potential client who told him that he preferred to invest in Philip Morris, Warren instead of arguing with him would agree that Philip Morris was a great company. company and a smart investment. would put an immediate end to the potential conflict and allow warren to engage the client in a discussion about the wonderful virtues of geico the influence of benjamin franklin the wisdom of american founding father benjamin franklin has played an important role in the education of both warren and his partner Charlie Munger at Berkshire shareholder meetings and annual reports are both quick to cite Franklin's influence on their business and life philosophies, so it's no surprise that Franklin's strategy of avoiding arguments and respecting the opinions of others people has made its way into Warren's quiver To get people to listen to his ideas, we have selected a short fragment from Franklin's autobiography that Warren found influential on this point.

This is what Franklin said. I made it a rule to avoid all direct contradictions with the feelings of others and all positive things. self-affirmation, I even prohibited myself from using every word or expression in the language that implied a fixed opinion such as, for example, certainly, undoubtedly, etc., I adopt it in place of them, I conceive, learn or imagine that a thing is like this or like this or like this. It seems to me now that when another stated something that I considered an error, I denied myself the pleasure of abruptly contradicting him and immediately showing him some absurdity in his proposition.

When I responded, I began by observing that in certain cases or circumstances his opinion would be I am right, but in the present case some differences appeared or seemed to me, etc. I soon discovered the advantage of this change in my way of being. The conversations I had went more pleasantly. The modest way in which I proposed my opinions gave them a better reception. and less contradiction. I felt less mortified when I was found wrong and more easily convinced others to give up their mistakes and join me when I was right. Franklin explained that his ability to persuade his compatriots to follow his ideas was a result of this approach.

Warren has learned that avoiding arguments and accepting other people's opinions is one of the secrets to getting other people to listen to you, which turns out to be a very useful skill if you're trying to build. Fantastic Fortunes and Great Nations Chapter 18 talks about the other person's wants and needs when you want someone to do something stop thinking in terms of what you want and think in terms of what they want Warren has learned that finding out what your managers want need or want and Being able to talk about your needs and wants is one of the great secrets to being successful as a manager and business owner.

One of Warren's early influences in this area was Henry Ford, the great industrialist of the 20th century. Ford in his autobiography said that if there were any secret to success lies in the ability to get the other person's point of view and see things from that person's angle as well as our own. He incorporated this idea into both his family life and his business life when he wanted his children to do it. something or change their behavior instead of scolding or criticizing them, he talked about their needs if he wanted them to lose weight, he offered a reward for weight loss, which spoke to his teenage need for cash when he was looking to buy a private family business to Berkshire Hathaway Warren speaks of the owner's pride in the business.

He understands that the owner may want to sell the company for as much money as possible, but that person must also ensure that the company's loyal employees are well taken care of and that once the company is sold. The company is not divided and is sold piece by piece over the years. Warren has lured more than a dozen businessmen and women to sell her their private companies, even as other companies and leveraged buyout firms have offered those owners more money. In the case of the German conglomerate, Rose Blumkin, owner of a furniture market in Nebraska, had been offered $80 million for the entire company.

She wanted the money but she really didn't want to stop running the business she had built and that she loved so much instead of selling it. to the Germans, she sold 90 percent to Warren for $40 million because he agreed that Mrs. B and her children could stay and continue running the entire show. Warren got a fantastic deal at a great price with the brilliant Mrs B and all. -The star management team got involved in the deal because they spoke to their needs and there is little doubt that All Ulchi's founder and president of flight safety would have made more money if he had been sold to a leveraged buyout company, but Warren spoke of your needs. and he offered him the best of both worlds: a lot of money and the opportunity to continue working on what he loves to do, which is managing aviation security.

What did Warren achieve? You got a great business run by a genius at a price that still keeps you smiling is there anything better than that chapter 19 encouraging others to have the right idea inducing the other person to have the right idea is much more powerful as a motivational tool Than tell them the right idea that Warren is famous for? He hires people and then doesn't tell them what to do. Instead, it allows them to set their own goals and standards. They invariably set the bar higher than he would have wanted. Warren's managers would say that although he never tells them what he expects fromThey know that he expects a lot, his silence leads his managers to imagine that he expects a lot and this becomes the reality that drives his performance by telling someone to do something and it becomes an order that no one likes to be given.

Give orders we naturally resist anyone who gives us orders however, if it is our idea, we treat it as gospel and act on it with purpose and conviction, we are in control. A perfect example is a motivational story that Carnegie used to tell about the sales manager of a car dealership who, after many failed attempts, motivated the salesperson around him. finally he gathered his sales team and asked them to tell him what they expected from him as a manager while he listened to their answers he wrote them on a whiteboard and then asked them what he had the right to expect from them they spoke directly and said he could expect them to be honest and hardworking team players who showed initiative and optimism that they would set their own standards if they lived up to them not only met them but far exceeded them generating record sales is a very simple concept that is easy to put into practice in our everyday life here are some examples instead of ordering someone not to do something illustrate the negative consequences of doing it not swimming in the lake becomes there are crocodiles in the lake and they like to eat little children, then the child is induced to think that crocodiles are eating him, forcing him to not swim in the lake instead of ordering someone to do something. illustrate the positive consequences of doing so I want sales production to increase becomes if sales production increases, it will make me happy and I will be able to pay bigger bonuses at Christmas.

Workers realize that an increase in sales will make a happy manager and bigger Christmas bonuses. If you're wondering how to best manage your kids, try using the same method. Sit your kids down at the beginning of the school year and ask them what they expect from you for the next year, list your expectations, discuss them as you go, when you're done and you're done. get comfortable with their expectations, accept them and then ask what you can expect from them, you may be surprised at how demanding they can be of themselves, ask questions instead of giving direct orders, as we just said, Warren is famous among his managers for never give a direct order, he is also known for asking for tons. of the questions Warren recognizes that no one likes to receive a direct order, just as no one likes to be told what to do.

Bossy managers are generally hated and are the least likely to inspire workers to excel. A direct order can work in the military but in the civilian. In life it can cause persistent bitterness that impairs performance. Warren learned that great managers give their orders indirectly through a form of making suggestions. One way to make a suggestion is to simply ask questions. Asking questions makes the suggestion more acceptable and often encourages employees to propose it. With your own ideas to solve the problem, we are more willing to act on our own ideas than on the ideas of others, especially when they give us orders.

It's always best to let people discover something for themselves, if that's not possible then give them a little nudge in the right direction with a suggestion framed as a question here are some examples of how to use a question to turn a direct command that will offend employees in a suggestion that will encourage them to act voluntarily direct order I want that job Suggestion made by Monday. It would be great if we could finish the work by Monday. Do you think you can find a way to make that direct order? Reduce speed. You're driving too fast.

Suggestion. You know the roads are pretty slippery. Think that if we reduce the speed that would make direct ordering safer. This is not the way to do it. Suggestion. Can you think of a better way to make that direct request? I want you to do it this way. Suggestion. Do you think if I did it this way to make it better direct order when we go to the zoo I want you to stay next to me suggestion when we go to the zoo can you think of any reason why you should stay next to me? He rarely gives a direct answer order but is famous for peppering his managers with many questions now you know why chapter 20 we all make mistakes admit it when we're wrong we should admit it quickly and emphatically Warren believes that when people make mistakes they should be frank about it and admit it quickly and emphatically doing the opposite would give the impression that we are trying to hide something or that we do not have the courage or integrity to admit when we are wrong this type of behavior leads people to distrust us no one can stand no one who always He's right and no one can stand someone who won't admit when they're wrong and if they won't admit when they're wrong, what else are they lying about on the ledgers?

Maybe also the managers who don't do it or refuse. Admitting they are wrong causes a sort of festering distrust among employees they become less respectful less willing to follow more distrustful of management's recommendations and guidance Warren is always honest about each and every mistake he makes he is upfront with his managers when he fails and he is the first to admit to shareholders when he screws up and they love him for it when he recently made a bad investment in a couple of Irish banks that cost Berkshire several hundred million, he was very candid when he wasted an investment In Conoco Phillips, an oil company that he had bought when oil cost one hundred and forty dollars a barrel, his mistake cost Berkshire two billion dollars, but he did not hesitate for a second to admit his mistake to Berkshire's shareholders, he did not. tried. blaming someone else or saying that other people had made similar mistakes simply saying that you made an error in judgment and that it was your fault by admitting when you were wrong and being upfront about it Warren earns the trust of his employees and shareholders alike and by at the same time at the same time avoid all the political consequences that have brought down great men since the beginning of time step five management traps challenges and learning opportunities the final chapters of this audiobook include some of Warren's important axioms about the dangers of asking lent too much money to employees who break the law good ideas gone astray making mistakes managing sycophants missing opportunities seeing the way forward and some knowledge to manage our own lives we all learn the hard way through experience weigh them carefully as they will not only help you chapter 21 the hidden dangers of making a living with borrowed money the roads of business are full of potholes a plan that requires avoiding them all is a plan for disaster warren Buffett business managers who have to borrow a lot of money The money is betting that they won't hit economic bumps in the road.

His business plan requires avoiding problems, but even the best-run companies can't avoid problems forever if they are highly leveraged. Banks are the king of leverage and have to borrow everything. They lend that money and most of that money was lent short term and lent long term when those people who lend the money to the bank short term want it back and the bank can't pay it back well, that's when things They start to get ugly. A complicated economic change can offer many opportunities as long as we have the money to take advantage of it. Economic change can also spell disaster if we have taken on too much debt to survive.

Life is full of economic changes. Always has been. There always will be. The leverage is very. tempting and always leads to trouble Warren BuffettThe temptation of leverage is that it can dramatically improve the performance of any business for the manager who learns to use it. Let's say that in a normal year the business you run makes a profit of six million dollars without any debt. You have a business opportunity that costs. 100 million but you will earn 15 million a year, this sounds promising, right? The problem is that his company doesn't have the hundred million needed to finance the deal.

Your Wall Street bank friend is more than willing to lend you the hundred million. If you agree to pay him 10 million a year in interest, this means that after paying the 10 million in interest you will make a net profit of 5 million on the 15 million in new business, add the 6 million in the old business and your company. Now he is earning a total of 11 million. Make the deal and almost double your net profits. Guess who will receive the big bonus at the end of the year? He will do so for his brilliant management of the company's assets with Wall Street investment banks.

The leverage game. An extreme loan of 100 billion was taken out at five percent in the short term and charged at seven percent in the long term and suddenly your company is making two billion a year in profits and the financial press is writing about your salary of fifty million dollars, now you know why. Managers tend to pressure their companies to take on as much leverage and debt reduction as they can put to profitable use. However, there is a problem and it is a big one. What happens if there is a recession and your company's business revenue drops dramatically to the point? that you can't generate enough money to pay the debt, in this case you would start burning through the company's net worth until the economy recovered and the business improved or you would be forced to put the company into bankruptcy when companies began to fail. consider the possibility of filing for bankruptcy.

Management is usually the first to go; However, if the company had not taken on the $100 million in debt when the recession hits, all the company would have to do is reduce production to the point where it could meet the new lower level of demand at which point? When would I start making money again? Yes, people would have lost their jobs, but the company's survival would not be in doubt. When Warren looked at a company during the 1950s and 1960s, he always asked how it fared during the Great Depression. Whether he did well or failed, this told him a lot about the historical nature of the company and its need to use debt.

Warren still looks at a company's long-term historical performance. He often mentions that the companies in which he has significant investments are similar. Coca-Cola and Wells Fargo have a hundred-year history. These are companies that not only survive the great depression, but are also going to survive the current recession, but he continues to keep an eye on how much debt all the companies he owns have. Knowing that tough times can wipe out even the best businesses, Warren's own Berkshire Hathaway has long avoided going into debt if Warren can't pay it off with cash. He's not interested. Warren even goes so far as to let the cash accumulate if I can't find a good value that also protects Berkshire against tough times in the middle of the great recession of 09.

Berkshire had very little debt and only a very comfortable cushion of 20 thousand million dollars in cash, giving Warren many sleepy nights and the economic firepower to take advantage of the lower stock prices brought on by the recession Old-school managers like Warren are very reluctant to use debt to improve profits, they lived through hard times and have the scars to prove it, but in the last 15 years the Fast money meant quick promotions and big bonuses, so the new generation accumulated debt and, in the great recession of 2009, many they found themselves hanging in the abyss of financial failure and the sudden end of their briefly successful careers.

Sometimes old dogs know all the tricks. 22 Do good ideas always bear fruit? You can get into a lot more trouble with a good idea than with a bad one. Warren Buffett. This is used to quote his late mentor Benjamin Graham, who taught Warren to pay attention to the potential danger of a good idea. Managers never act. about ideas that they know are bad, these are eliminated at first, but a good idea is acted upon and, if successful, it becomes an institution. Subprime mortgages were originally a good idea. They let good people with marginal credit buy houses and mortgage brokers make money, but over time people with bad credit qualified for subprime mortgages, more people got houses, and more mortgage brokers got even more money, then one day We woke up to a recession and people started losing their jobs and didn't have the money to earn. their subprime mortgage payments suddenly the great idea started to turn into a disaster.

The same happened with the insurance giant aig, which sold insurance to banks and other institutions to cover the risk of non-payment of a largenumber of investment grade corporate bonds. The risk of thousands of corporations around the world going bankrupt at the same time was virtually zero and the premiums that banks and institutions paid would never have to be paid in claims, leading to him earning hundreds of millions in bonuses. low-risk easy money, then one day the bank showed up wanting to insure several groups of high-risk loans that had been packaged together like corporate bonds had been.

I thought that since underwriting corporate bonds was making them a ton of money, underwriting a bunch of subprime mortgages would also be profitable, but they didn't bother to sit down and actually calculate the risk that a large pool of subprime mortgages would go bankrupt and then the recession would hit and hundreds of thousands of subprime mortgages would begin to fail. The default and the prices of the subprime bonds that Aig had insured began to fall and as they fell, Aig had to put up more and more collateral to back its subprime insurance contracts, then things went from bad to worse. worse and Aig ran out of assets it could present as additional collateral the company suddenly risked defaulting on all of its subprime insurance contracts it had sold to the world's financial institutions if Aig defaulted on all the banks and institutions to which it sold contracts would be left with uninsured bond portfolios, this means that banks and institutions would be on the hook for every dollar of drop in value that their bond portfolio suffered, a bit like not having insurance for your house when it burns down. .

The prospect of AIG not providing more guarantees essentially threatens to bankrupt many of the world's investors. insolvent financial institutions, which would have meant a total collapse of the global economy, which is why the US treasury intervened with a loan of 85 billion dollars to aig because the whole game was on the table in the end an idea really great at guaranteeing corporate investment grade debt led aig to guarantee pools of subprime mortgages which turned out to be a very very bad idea for aig and the rest of the world as warren says you can get into a lot more problems with a good idea than with a bad one chapter 23 how to handle employees who break the law you can make a lot of money in the center of the court there is no need to play with the margins Warren Buffett this is the advice that Warren gave to the managers of their companies after the fallout from the Solomon Brothers bond Trading scandal Solomon Brothers was a Wall Street investment bank famous for its bond trading prowess in the late 1980s Warren invested $700 million in stocks company preferreds in 1991 Two Solomon bond traders violated U.S.

Treasury bidding rules to buy Treasury bonds that were caught submitting false bids to the U.S. Treasury in an attempt to take a larger share of the new issuance of treasury bonds than the united states treasury allowed the solomon administration upon discovering the illegal acts of its traders was not forthcoming with the securities and exchange commission or the united states treasury This led Treasury to consider banning Solomon from trading in Treasury securities, which would have been a fatal blow to the company and to Warren's investment at the request of Solomon's board of directors. Warren stepped in as chairman of the board and immediately cleaned house on Solomon by removing his CEO and senior managers who had been involved in overseeing the traders who made the fake offers, he also instigated a direct policy with the US Treasury. which gave researchers free access to Solomon's records.

In the end, Solomon had to pay a hefty fine of $290 million, but he had to continue trading in treasury bonds, which meant he had to stay in business. Warren passed this lesson on to his managers, while it is important to be aggressive to make money, you can make the money you need by staying within the confines of the law when managers break the law in the name of making a quick buck they risk losing. his entire business with a single stock in the case of Solomon the bond trader bet the entire company on a slightly larger share of the US government bond market.

As managers we have to keep an eye on our employees to make sure they don't risk the store in an attempt to advance their careers and when we catch employees doing something illegal, the first call we make is to the authorities so that they do not make the call and become accomplices after the fact which is also a crime It's a difficult lesson that no one wants to learn firsthand chapter 24 dealing with your mistakes I make a lot of mistakes and I will make a lot more mistakes too that's part of the game you just have to make sure the right things outweigh the wrong warren

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no one is perfect and that includes to warren mistakes are part of the landscape and there is no way to escape them the trick to remember is that our successes in life should outweigh our mistakes reverse the equation and we end up in trouble warren's mistakes include paying too much for a business i know phillips and the then called usair buying blue chip stamps from a sinking business and not buying the right business at the right time initially mocked the capital city broadcasts He also made some serious mistakes in managing his managers.

He hired himself to manage his insurance operations, which turned out to be a bad idea. To manage Dempster Mills, the first manager he hired was a loser, the second a winner, but he still ended up being the one. The richest man in the world The way Warren deals with his mistakes sets him apart from the competition. He learns from mistakes but doesn't focus on them. Those who focus on his mistakes waste an enormous amount of time and energy that they could spend. on developing new ways to make money and enjoy life mistakes are part of the past and, failing to remember their lessons, Warren says they should stay there since all the money that can be made is somewhere in the future .

Chapter 25 sycophants, are they an asset or a liability? One thing to be sure of is that if a CEO is enthusiastic about a particularly foolish acquisition, both his internal staff and his outside advisors will present the necessary projections to justify his position. Only in fairy tales are emperors told that they are naked. Leaders love Warren Buffett. to be loved and in the process of needing to be loved they surround themselves with people who do, people who do make a living telling the boss how wonderful he is and how great his ideas are, even when that is not true, why No?

They tell the truth because that's not their job Their job is to say yes to the boss That's why they are handsomely rewarded Every business has sycophants crawling around corners flattering the boss and reinventing the truth Hire an advisor and their job probably becomes advising you get you to do what you wanted to do in the first place advisors who express disagreement too often soon find themselves out of work most people don't keep any men around what's wrong with surrounding yourself with men who do swim until the disaster you could have been foreseen falls into his lap and his board asks him to resign Wall Street is littered with the remnants of CEOs who let their men convince them that their companies could manage the risk of derivatives when the CEOs discovered that the risk could not be managed, it was too late for them and their companies.

Warren's solution is to surround himself with as few people as possible. In fact, he has often said that his idea of ​​a group decision is looking in the mirror. He also seeks advice. From Berkshire's vice president, Charlie Munger, who says no ten times more often than he says yes, Warren thinks of Charlie as his nobody, and although Charlie's no can never make him the life of the party that has kept him from fall into disaster on more than one occasion chapter 26 learn from missed opportunities since errors of omission do not appear in financial statements most people do not pay attention to them we rub our noses over errors of omission Warren Buffett even the best manager misses opportunities and this often goes completely unnoticed in the world of investing and management at Berkshire Warren openly admits that he missed more opportunities than he should, for example, he regrets not having gotten into Walmart and Walgreens early, when Warren misses an opportunity, he likes to spend a little time contemplating why he didn't do it. cross his radar screen or why he saw it but he didn't act.

He does so in the hope that this reassessment of the situation will enlighten him enough to not repeat the same mistake in the future. In Warren's world there are two basic types. of missed opportunities, ones we missed because they weren't on our horizon and two we saw but didn't act on, these are the most frustrating because they were staring us right in the face if the opportunity simply wasn't on our horizon. The solution is to expand our search field. There is a whole world of business brokers and investment bankers who are more than happy to show us potential opportunities in terms of opportunities that we can see but do not act on.

The most common reason for leaving one out is that we miss the calculation of the risk involved. These are opportunities that we would have liked to act on but that we mistakenly consider too risky. Errors of omission due to incorrect risk calculation are the easiest to understand that we make at all. the information we had available and made a judgment based on that information, if we do not have the correct knowledge, we cannot make the judgment competently. This is why Warren allows the managers of his individual companies to make even the most important decisions regarding the In the companies he runs, he trusts that they know his game better than he does, but mission mistakes that occur because we did not have our eyes open to the opportunities are mistakes that speak of our management capacity and our organizational skills.

A good manager is always looking. looking for opportunities and has established the necessary infrastructure to help you. The best managers follow Warren's example, examined the opportunities they missed and asked tough questions about why they missed them, and next time they could take the brass ring. to see it slip through his fingers chapter 27 bank on the tried and true you don't have to think about everything it was isaac newton who said i have seen a little more of the world because i stand on the shoulders of giants there is nothing wrong with standing on the shoulders of other people Warren Buffett One of the big mistakes of young managers is that they believe they need to have an original idea or some stroke of creative genius to catapult them to the top.

These brilliant ideas more often than not lead to expensive madness. Warren has discovered that the best ideas in business and life are those that are tried and true, where the chance of failure is almost zero. Where do these proven ideas come from? They come from other people and companies that have put them into practice successfully. By studying successful businesses we can get dozens of great ideas about how to do something right, and by studying failed businesses we can learn how easy it is to do something wrong. Miles Davis, the great jazz musician, once said that lesser artists borrow from great artists who steal the same.

What can be said about great business managers: if we see a great idea, we should steal it and implement it immediately. Where do we find these wonderful ideas? Studying the competition to see what they are doing right and what they did wrong. Rose Blumkin, who founded Nebraska Furniture Mart in the 1930s and brought with her from Russia the simpler marketing concept of discounting prices in the name of increasing volume, which she implemented in her store. Established local merchants refused to give discounts and Rose took tons of her business away from them. the fact that she was sued for unfair business practices her defense was simple the other merchants charged too much the judge ruled in favor of rose and the next day he and his wife went to her store and bought rugs for their house rose did not invent the discount she borrowed an idea that traders were using in Russia and he used it to make money in his new home in America Jack Ringwald owned and operated a small insurance company called National Indemnity in Warren's hometown of Omaha Jack ran his company with a watchful eye to costs and was a stickler for underwriting discipline, he would only write insurance if he knew it would make him money if rates went down, he simply stopped writing policies, even if it meant having his staff sit around doing nothing he could afford because had accumulated a surplus. of capital during good times, he once told Warren that there are no bad risks, there are only bad ones.bad rates.

Jack became rich running his business this way and when Warren bought National Indemnity he not only maintained Jack's philosophy of disciplined underwriting, but put it into practice in all the insurance companies he has invested in, as disciplined underwriting has allowed Berkshire to grow from a small insurance company in Omaha to one of the largest insurance operations in the world. You don't need to be at the top of Mount Everest. knowing that it is high and it doesn't take a genius to identify a great manager or a well-run business, but once you pay attention and start learning from the professionals, it works for Warren and it will work for you.

Chapter 28 moving up in life it is better to date people who are better than you choose associates whose behavior is better than yours and you will head in that direction Warren Buffett according to Warren in managing our personal life we ​​are the ones who hang dating with a low life Warren spent most of his time as a teenager at the racetrack, where he learned to calculate probabilities instead of falling into a life of gambling. However, he was able to use his knowledge of probability calculus in college and graduate school. He found mentors who were considerably older and wiser than him, who took an interest in him and guided him into the world of finance and investing.

He moved up at Warren's. In the early days of running an investment company, he cultivated friendships with Omaha's business elite, including Nick Newman, who took storage techniques developed during World War II and used them to create the modern supermarket chain, and Jack Ringwalt, founder of the National Indemnity Company, who introduced Warren to the concept. disciplined subscription later in life he spent time with catherine graham owner of the washington post and bill gates founder of microsoft these friendships paid off for warren over the years and gave him successful and creative business models to emulate warns lesson here we are who we associate with aiming high in your associations and you will reach the top aim low and there is no telling how low you will go chapter 29 manage your inflation the best asset during inflation is your own purchasing power anything you do to improve your own talents and become more valuable you will reap rewards in terms of real appropriate purchasing power if you do something well, whether you are a major league baseball player or a good assistant, whatever it is, you are your best asset Warren Buffett Warren says that you should think on yourself as a business, even if you don't look like one or act like a business, you are a business with an infinite capacity to make money and your greatest asset is yourself, when you are young and inexperienced, your business doesn't prosper. a lot of money, but the more education and experience you gain, the more your earning potential will increase.

Education and experience are the two keys to starting your business, whether you are an accountant or a rock star, everyone starts at the bottom and works their way up, yes. Dad may have opened a door too, but the reality is that to get to the top and stay at the top you must have the energy and drive to excel in your chosen trade or profession. Warren believes you should take good care of your business, which means by taking good care of your health and getting a good education, you should find ways to improve your earning potential and protect you from disasters.

When it comes to staying ahead of inflation, nothing beats your potential. of win. The more special your business is, the more free you will be to raise prices people with unique professions have always had the advantage as a hedge against inflation because the lack of competition allows them to charge more for their services the rule here is simple each of us It is an economic entity with great earning potential and if we take care of ourselves and get an education our economic potential is infinite and will not only keep up with inflation but can even make us rich chapter 30 personal loan management you can't Borrow money at eighteen or twenty percent and get by, I can't go bankrupt, so stay out of debt as much as possible.

When you have a reasonable down payment, find a house you like, buy it, but don't do it until you can handle it and take on obligations you can avoid. the others warren

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the world of retail has gone from selling you a product to selling you the money to buy a product the modern merchant makes money by lending consumers the money to make purchases it used to be that merchants made their money on markup of merchandise but in the era of volume discounts and tough competition, those margins have slowly eroded, but imagine if you could make money not only by selling goods but also by lending the customer the money to make purchases, you could charge twice when the consumer borrows the money and when he spends it, when companies learned that they could lend us money between eighteen and twenty percent, they realized very quickly that they could make more money lending money than selling products.

Credit card companies realized this years ago. They finance the purchase of even the smallest items and if you don't pay your bill in full or on time they charge you outrageous interest. This is not just good business, it is big business and merchants have followed modern home appliances. and computer stores are now banks in disguise; They would rather finance the purchase of a new television or refrigerator than allow you to pay cash to facilitate this money-making scheme.