Monday, March 15, 2010

My Hero

I'm not ashamed to say it out loud: I adore Warren Buffett.

The world's third-richest man, known as the "Oracle of Omaha," is wicked smart. Of course, that goes without saying.

But he is also - along with Bill Gates - the biggest philanthropist in the United States, having pledged the lion's share of his $47 billion fortune to charitable foundations. He told his kids that they'd all be millionaires and they should be happy with that. Then he gave 85% of his money away, most to the Gates Foundation, because they do great work and he didn't need the big ego boost (or bureaucracy) of his own charitable foundation.

Buffett is an agnostic who forcefully puts the lie to the moldy old card about how you "can't be good without god," giving godless heathens a "yes you can!" role model alongside Gates.

And he lives frugally:

... in the same 6,000-square-foot, five-bedroom, gray stucco house he bought in Omaha, Neb.'s Happy Hollow suburb in 1958 for $31,500. The home has everything the 79-year-old needs, including his very own handball court that he uses to keep fit.


Okay, so he has a $4 million beach home in Laguna. I love Laguna Beach, and would live there in a shack if I could swing it, so I can hardly fault him. And besides, that's still less than one hundredth of a percent of his estimated net worth.

Probably the best piece of advice I've gotten in 15 years of writing about money is this: Live just a little bit below your means. Don't live like a rat or save like a miser, but don't spend to the outer limits of your income either. Buffett embodies that philosophy and has been able to use his fortune to make the world a better place. I can't think of a more fitting legacy.

4 comments:

  1. What am I doing reading your blog? I should be reading his. Is he blogging? (I kid, I hope you know.)

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  2. You got me curious, Petrea, so I went to the Berkshire Hathaway site, which is a lesson in simplicity and frugality all by itself:
    http://www.berkshirehathaway.com/

    I couldn't find evidence of a blog, but he does send out an annual letter to shareholders that is worth reading for its wit and good advice even if you're not a shareholder. They're all archived here: http://www.berkshirehathaway.com/letters/letters.html

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  3. In reading the latest Buffett annual letter, I came across one of many gems that illustrate the man's greatness. The letter reports a 2009 gain in net worth of $21.8 billion. Not bad for a recession year.

    But how many CEOs would come clean about a painful mistake like this one:

    "And now a painful confession: Last year your chairman closed the book on a very expensive business fiasco entirely of his own making.
    For many years I had struggled to think of side products that we could offer our millions of loyal GEICO customers. Unfortunately, I finally succeeded, coming up with a brilliant insight that we should market
    our own credit card. I reasoned that GEICO policyholders were likely to be good credit risks and, assuming we offered an attractive card, would likely favor us with their business. We got business all right – but of the wrong type.
    Our pre-tax losses from credit-card operations came to about $6.3 million before I finally woke up. We then sold our $98 million portfolio of troubled receivables for 55¢ on the dollar, losing an additional $44 million.
    GEICO’s managers, it should be emphasized, were never enthusiastic about my idea. They warned me that instead of getting the cream of GEICO’s customers we would get the – – – – – well, let’s call it the non-cream. I subtly indicated that I was older and wiser.
    I was just older."

    That's my hero.

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  4. What particularly interests me about this is that he's apparently honest, and making money. And all those creepy, cheating, lying people got caught--maybe not all, but a lot of them, and even if they didn't get caught they lost money.

    This is why I don't cheat on my taxes. I figure honesty is how I'm going to get rich. Step one, anyway.

    Thanks for the links.

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