Buffett's Wealth Code: The Happier, The Healthier, The Richer
Author: Unknown
Source: China News Service
Update Time: October 18, 2010
In May 2009, during a two-day trip to the Berkshire Hathaway shareholders' meeting, I had the opportunity to meet Mr. Buffett three times. Despite the full day of the meeting, the 79-year-old man was in great spirits, his face often beaming with joy and laughter.
On September 29, 2010, at 2 PM in Beijing's China Grand Hotel banquet hall, I was honored to attend the special episode of the "Dialogue" program featuring a conversation with Mr. Buffett. This was my fourth encounter with him. Although Mr. Buffett had traveled for many hours to reach China, he still participated in a tightly packed schedule arranged by BYD on September 28th, only arriving in Beijing early on the 29th. The dialogue recording lasted one and a half hours, during which the host and various guests posed challenging questions. However, Mr. Buffett remained sharp-witted, witty, and mostly smiling, occasionally bursting into hearty laughter. It was evident that despite being eighty years old, Mr. Buffett was still very happy, healthy, and profitable. Why?
After the program ended, late at night, I reflected deeply and realized one point: the happier you are, the healthier you will be, and the more money you will make. So how can we become happier? I discovered that Buffett has three secrets to happiness, and these secrets have made his life more joyful, his body healthier, and his investments more profitable.
The first is doing what you love. Buffett does things primarily because he loves them, not because others do: "I have an internal scoreboard. If I do something that others don't like but I enjoy, I feel happy. If I do something that everyone praises but I am not satisfied with, I won't feel happy." Why does Buffett engage in investment? "One of the reasons I am attracted to securities investment is that it allows me to live freely as I wish. You don't have to dress up every day for success."
Investing requires just a computer and a phone, whether you're at the ends of the earth, in the kitchen, or even in the bathroom—without clothes—you can still invest. Investing doesn’t require much attention to appearance but demands high analytical skills, consuming both physical and mental energy over long periods. Buffett reads many newspapers and magazines daily, studies the annual reports of 5,000 American companies over decades or even centuries, and reads numerous business investment books. Yet, instead of feeling annoyed, he finds joy in it. For him, beating the market and achieving excellent investment results is akin to an athlete overcoming opponents—not solely for medals or money, but for the sheer joy of continuously breaking personal records.
Without a doubt, Buffett loves money, but he loves earning it even more: "It’s not just because I want money; I find it fascinating to earn money and see it grow." "Every morning when I go to the office, it feels like I'm going to paint frescoes in the Sistine Chapel." Just like children—even those just a few months old—who play all day without tiring because they are doing what they love, playing games that bring them joy, happiness negates fatigue. Buffett has been investing for so many years and hasn't retired at 80, willing to travel far to examine BYD because he loves investing. Because he enjoys it, the more he does, the happier he becomes, the healthier he feels.
Similarly, in investing, choose companies you like—their products, their management style—not just liking them casually, but truly loving them to the extent that no other company's product can replace them. When you like a company, likely thousands or millions of others share your affection, making the company's products highly popular. Even if priced higher, they still sell well, generating substantial profits and making shareholders rich. These are the super-star companies with franchise rights that Buffett refers to: "A franchise arises from a product or service that: (1) is needed or desired by customers; (2) is thought by customers to have no close substitute; (3) is not subject to price regulation. The existence of these characteristics will allow a company to raise prices actively, thereby earning higher capital returns."
Since childhood, Buffett loved drinking Coca-Cola. Later, between 1988 and 1989, he invested $1.3 billion in Coca-Cola stock, which grew more than tenfold in ten years, earning him $12 billion from just one stock.
Buffett also loves using Gillette razors daily. In 1989, he invested $600 million in Gillette, and by 2005, when Procter & Gamble acquired Gillette, his investment had appreciated to $5.1 billion, earning eight times his initial investment over sixteen years.
Doing what you love makes you happier and healthier. Buying stocks in companies that produce products you love, especially when the stock is undervalued, makes you richer. Not only do you enjoy the happiness that the product brings to your life, but you also enjoy the happiness of stock appreciation in your investments. Most importantly, because you love the company's product, you understand the company better, reducing the likelihood of major mistakes, minimizing losses and pain, and relatively increasing the chances of profit and joy.
The second secret to happiness is being with people you like. Buffett says working with people you don't like is like "marrying someone you don't love for money": "I think marrying someone you don't love for money and spending a lifetime together is absolutely crazy. Sometimes you might have no choice, but if you're already quite wealthy and still do this, you're definitely a fool." Look at young lovers—no matter how far they run or how much they endure, as long as they're with someone they love, they remain happy and never tire.
Buffett found that finding partners you like while working makes you happier. He also discovered that finding managers you like when investing improves your investment performance. Years of investment experience have convinced Buffett that only by choosing excellent companies managed by managers he likes, trusts, and admires can he hope for good returns. "After making other mistakes, I finally learned to work only with people I like, trust, and admire. As I've said before, this principle itself cannot guarantee success: a second-rate textile factory or department store will not thrive simply because its manager is as outstanding as the person you'd want to marry. But an owner—or investor—who tries to collaborate with such high-quality managers in economically advantageous enterprises will surely achieve greatness. Conversely, we would never want to partner with managers who lack admirable qualities, regardless of how attractive their business prospects may be. Collaborating with unethical individuals has always been futile for us."
"We continue to benefit from the exceptional managers of the companies we hold shares in. They are morally upright, capable, and always considerate of shareholders. The extraordinary investment returns we have achieved from these investments reflect the extraordinary personal qualities of these managers."
In summary: investing is about trusting people. Being with people you like makes you happier, healthier, and richer.
The third secret to happiness is living in a place that makes you happy. Many young people strive to develop in big cities, but after experiencing life in big cities, Buffett chose to return to Omaha, Nebraska, his hometown with a population of only 400,000: "I’ve lived in New York and Washington, but the traffic congestion in New York wastes too much time. I’m willing to fly for three hours to New York or Los Angeles to enjoy the bustling city life, but I wouldn’t want to live there and suffer every day."
Living in the happy hometown where you grew up, seeing friends you've known since childhood, eating food you've enjoyed since you were young, low housing prices, low living costs, a slow pace of life, and less pressure will undoubtedly make you happier and healthier than living in a big city.
You may not have realized that Buffett also found living in a happy hometown, even in a small city, is better for your health and investments: "I think Omaha is a place that keeps the mind sane. When I worked in New York in the past, I often felt overwhelmed by too much external stimulation, leading to excessive excitement and adrenaline secretion, causing me to react to these stimuli. Before long, I might have done something crazy. It’s much easier to think calmly in quiet Omaha."
Do what you love, find people you like, and live in a place you enjoy. This will make you happier, healthier, and richer. This was the biggest revelation from my fourth meeting with Mr. Buffett.
(Liu Jianwei, Chief Investment Advisor of Huian Fund Management Company)
(Source: The First Financial Daily)