Warren Buffett and the Longterm Principles of Investment

CAVEAT: BH in this article refers to Berkshire Hathaway. The information contained in this report is purely gathered from the research and knowledge gained by  Pia Lord. Where words and phrases are copied from literature, I give proper credit to the referencing source. I make no claim to know from first hand meeting information about Warren Buffett, rather from reading Annual Reports from BH.  Any misinterpretations of the readings are pure error on my part, however since they are my opinions, I take no responsibility from these.  Please do not make investment decisions based on this information.  I am in large part creating these articles  to gain greater knowledge myself about investing and investment principles and practices.  I hope these articles will serve to educate and enrich your understanding of best practices in life and business.

  Warren Buffett  is by  now a household name and legend in the USA and around the world.  The name Warren Buffett is synonymous with fortune made in the investing and business worlds.  Through his association with Bill Gates he has also entered into the high tech world of the future and the world of charitable giving.  Warren Buffett and his partners at Berkshire Hathaway have created a mega organization with many companies, owned by BH. These companies are managed by CEOs, many of whom used to own their own companies before selling to be part of the Bershire Hathaway, Inc, a highly exclusive group of mainly US businesses.  

One of the principle ideas that WB and Charlie Munger, partners convey in the “business owners guide” is that investors who buys stock are “owner partners “ and the BH is set up for the “long term”(Berkshire Hathaway Annual Report 2003).  This long term partnership that BH engages in with their investors has been resoundingly successful.  Let looks more closely at this and see why it works.  We could liken this approach to getting married or setting up a plantation, beginning and building a long term venture.  What sort of things do we need for a long term venture?  Well we need a vision, knowledge and skills, a niche or a focus, and an overall game plan within our immediate reach to start working on today!  You also need people and an attitude towards other human beings that is caring, inclusive and edifying.

At BH they invite people in (through the purchase of shares)so to speak, to build a business with them. They have a vision, they have tremendous knowledge, skills and have found a niche.  How have they done this? And what are the results?  BH holding company began as the owner of a textile business entitled Berkshire Hathaway in Massachusetts.   Over the past almost 50 years the company has acquired business after business in many arenas.  In purchasing these businesses one of the principles they uphold is to purchase for the long term.  They are interested in buying excellent businesses to hold on to.  This principle is one to look into further.  

Now if I was going to have a business partner, I would look at someone for the long term.  This type of person would have integrity, faith, an active mind, be a doer and a thinker, be a mover and a shaker in the best sense to stimulate others to action .  Other excellent qualities that are important are to be teachable and to use your active mind.  

Lets look at another example.  Lets say we wanted to start a fig plantation.  This is a long term venture, for fig trees can live and produce for up to fifty to seventy five years.   We would need land with fig trees on it preferably, a manufacturing plant, with a sales staff and managers.  Fig trees can last for up to 75 years, so if it takes you three to  five years to get started, all the better. Just as long as your are taking daily steps to insure your progress towards your goal.  This progress would entail study of what it means to develop a fig farm. You are in it for the long term.  This attitude would govern your actions.  Everything that you do would be done to develop the fig plantation, and your relationship with the people who are going to be working with you on this establishment.  

So the best thing to do in year one is really to develop your vision, and begin to seek out the people, the land, the trees, the manufacturing equipment, the sales force, the capital required to make purchases.  You are in this for the long term.  You might even want to develop maps and get to know an area that you are interested in .  You may want to do a GIS project and determine the best location for your trees and plantation.  Surely you would want to read up on the literature that is available from scientific sources.

Now this is only one example.  Perhaps your idea is to become a pilot or a sea captain or develop an internet marketing business.  Perhaps your idea is for world peace and prosperity for each human, each family.  What ever your idea of a successful life includes, you must do your due diligence, study your field, create and write up your vision and business plan of action.  Then on a daily basis your must give yourself the top five or ten goals to achieve.

Having faith can be a challenging thing when those around you rebuff your vision.  When you have not enough money to simply start the venture as some others can.  But there are ways to overcome hurdles.  Many people such as Napoleon Hill have overcome daily life struggles to achieve the zenith of their dreams.  Listen to the YouTUBE Napoleon Hill interview about his visit with Andrew Carnegie.  At the end he shares a daily prayer with us.  He says ‘ Lord grant me not more of the things that I want, rather give me more wisdom to use what you have given me at birth.  Namely, grant me greater ability to completely guide the power of my own mind for the creative purposes that I wish to see and achieve in life.’

This prayer or daily meditation has great power.  For to truly use more and more every day of the gifts which we have within ourselves and to share those gifts with others is living debt free.  Indeed, we can create abundance in the properly guided mind and actions.  We are thus reaching into ourselves and others to find the best of what lies therein.  And with that create each day something that will bring you closer to your goals and to your higher plane.  When it is said that on average humans are only using 14% of our brain power.  That leaves a whopping 86% of untapped potential in each one of us!  I think we can do better.  Let try reversing that number and using  that 86% that lies dormant.  I challenge you today!

Make your plan for the long term, make your relationships for the long term and tap into your untapped potential within! 

Pia Lord