Warren Buffett: Teacher at Heart

“Financial success is not a matter of genius," says Buffett. "It is a matter of having the right habits.”

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Warren Buffett has often remarked that he would rather be remembered as a teacher than an investor. And, better yet, he actually means it. He freely shares his knowledge and expertise with others — far and wide — through lengthy annual letters, countless media appearances, and those marathon Q&A sessions in Omaha each spring.

For a long time, too, Buffett met with high school and college students to answer their questions about personal finance and, hopefully, inspire them to start compounding wealth at an early age.

He obviously relished the chance to impart his hard-won wisdom onto impressionable young students — gifting them a fleeting opportunity to learn at his feet and seize control of their financial futures at a most opportune time.

One such occasion came on November 10, 1997, when Buffett spoke at the “Fiscal Fitness Forum” in downtown Omaha. Organized by Senator Bob Kerrey, the day-long event attracted hundreds of Nebraska teenagers who were eager to meet the greatest investor of all time and hear his homespun teachings firsthand.

Buffett’s overarching message to his young crowd: Lay claim to the limitless future still in front of each one of you by cultivating the proper habits and avoiding the pitfalls of youth. And, in doing so, you will forge a life untroubled by regret or envy.

Here are some of the highlights from Buffett’s remarks that day…

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(1) “Financial success is not a matter of genius. It is a matter of having the right habits.”

At the “Fiscal Fitness Forum”, Warren Buffett was mostly preaching to the choir. The assembled students — juniors and seniors in high school — had been specially selected by their teachers for their leadership skills and interest in financial matters.

So it probably came as no surprise that many of them were already adept players of the money game. 93% of the students already had savings accounts — and a decent number had dabbled in stocks and mutual funds, too. And, most impressively, more than half of the crowd said that if they won $1 million, they would save or invest it.

“Bunch of capitalists here,” joked Buffett.

(2) “You have to save. It’s the only way you’re going to acquire wealth unless you hit the lottery.”

(3) “There’s nothing like the savings you accumulate before you start raising a family and the bills start coming in. Plus, the money will work for you for a longer period of time.”

(4) “I was explaining to nurses in the maternity ward what compound interest was [right after I was born]. That was the only thing I was interested in.”

• Buffett jokes about it here, but I’m not sure that most people really appreciate how industrious he was as a child. The young Oracle hawked bottles of Coca-Cola to his classmates, wrote a tip sheet for horse racing bettors called Stable Boy Selections, collected and sold used golf balls, delivered newspapers all across town, and even rented out pinball machines to local barbershops.

  • And when he wasn’t putting these fledgling business ideas into practice, he was poring over books like One Thousand Ways to Make $1,000 and technical stock analyses. From the very start, Warren Buffett had money on his mind.

(5) “The time to trade places with people is right now.”

• An unfortunate part of the human condition is that we often look around at what others have — possessions, wealth, success, status, etc. — and envy them for it. We might even dream of trading places with them, preferring their life (or at least the exterior facade that we can see) to our own. A futile wish, but all too common.

• Buffett, though, turns this sentiment on its head by telling his young audience that they can short-circuit these pangs of envy and jealousy by building a regret-free life from the very start. You will never be able to switch places with someone in the future, but you can — in effect — “trade places” now by emulating those admirable people in your own life and becoming more like them right off the bat.

(6) “Success is a journey, not a destination. The journey ought to be fun.”

(7) “I find the game itself interesting. It’s kind of a treasure hunt aspect.”

• Buffett, like many uber-successful people, structures his life in such a way that suits him perfectly. And a big part of that is because he knows himself. He knows what works — and what doesn’t work — for him. A weekend spent digging through Moody’s manuals or 10-Ks might sound like a bore to most people, but it’s what gets Buffett out of bed and tap-dancing to the office each morning.

  • Find out what makes your own life interesting — and jump in with both feet.

(8) “I don’t know what the soybean crop will be [this year or next]. If somebody makes a lot of money in soybeans, so what? It’s not my game.”

(9) “[I’m not bothered if the stock price of Coca-Cola goes up or down from one day to the next]. What I do care about is how many people will be drinking Coca-Cola products ten years from now. That’s what counts.”

• Here lies the crux of Buffett’s investment philosophy. Do not stray outside of your particular circle of competence and invest only in companies that you are capable of understanding. (Apparently, soybeans do not make Buffett’s list.) And that whenever you buy a stock, you’re actually buying a piece of a real business — not a ticker symbol to be traded willy-nilly with every fluctuation in price.

(10) “Nobody’s ever gotten rich in this world getting money for 18-20 percent.”

• Or, in other words, avoid credit card debt at all costs. (Unless, of course, you have the discipline and wherewithal to pay off the balance in full each month. In that case, feel free to collect those sweet reward points and other perks.)

• This reminds me of a crazy anecdote about Berkshire Hathaway investment manager Ted Weschler from a Wall Street Journal profile in 2012. So crazy, in fact, that I can’t make up my mind on whether I believe it or not.

During his early days at [W.R.] Grace, when he earned just $21,000 a year, Mr. Weschler maxed out his credit cards to buy all the shares of Pace Membership Warehouse he could, figuring his potential capital gains on the stock would exceed the interest charges on his credit cards. (He was right.)

• If I’m ever lucky enough to interview Weschler, this will be one of the first things I ask him about. It just seems so wildly out of character to gamble on short-term capital gains with a high-interest credit card balance.