What are the Secrets of Billionaires Warren Buffett and Charlie Munger?
SAGE TAKEAWAYS:
1) Investing Differently the Contrarian way
2) Keep Working Forever in the labor of love
3) Paying Yourself Last as an altruistic strategy for getting richer
The late Charlie Munger and his business partner Warren Buffett have both lived outstanding lives. This is widely known in the investing world. Warren Buffett himself has been often called, “World’s greatest investor“. He still remains the chairman of Berkshire Hathaway after the passing of his vice-chairman Charlie in November 2023 at hospital in California. What are the secrets of billionaires that make them different from us?
These secrets are hidden in plain view. Among the numerous books written about Buffett and Munger, there are countless online resources. This article attempt to distill some of the finest points. The three (3) things responsible for the success and wealth of Munger and Buffett are as follows.
1) Investing Differently
Investing differently entails the intelligent acquisition of assets at a discount to their intrinsic value. A mouthful of jargon if you’re new to investing. But this is the direct contrast of how most people invest. The herd lives by the Efficient Market theory. While Warren Buffett and Charlie Munger use both qualitative and quantitative analysis. These research methods are used to arrive at buying decisions. Investment portfolio management is also kept focused – without the use of orthodox diversification.
Other traders and speculators are equally convinced on their philosophy of investing. This includes beginner investors, professionals, and institutional investors worldwide. There is great debate about this theory. As investing itself entails risk, investors deem it fit to play the hand that fits perfectly with their risk tolerance, as well as their temperament.
Therefore, what are the secrets of billionaires like Buffett in the investing world? The simple answer is that, they are contrarians. This is the mindset and practice of going against the herd. Buying when others are selling; and selling when others are buying.
The Investing habits that make you a billionaire:
- See Stocks as Businesses
- Investigate Using Thorough Due Diligence
- Buying at a discount to the Intrinsic Value
- Manage a Focused Portfolio
- Invest for the Long-term
2) Keep Working Forever
Brian Tracy once said that life was divided into three main parts. Our LEARNING years, EARNING years, and then YEARNING years. The first stage is the school system and various educational options in the world today. The next stage is our work life. For most people, it’s the proverbial 9 to 5 employment with an employer. Our yearning years are the final stages of life where leisure, ease, or retirement is sought.
What are the secrets of billionaires and their work ethic? Billionaires like Elon Musk do not show any sign of slowing down. There is a grand all-consuming purpose of becoming the best in their industry. But retiring from work had never been an option either for Warren Buffett and Charlie Munger. They each hope to die in the saddle. Charlie of course passed in November 2023 at a ripe old age of 99. Warren Buffett is still active as Chairman of Berkshire Hathaway at age 93.
The Work Ethics That Make You a Billionaire:
- Working Long Hours
- Being Decisive With Your Plans
- Taking Big Risks
- Outworking Your Competitors
- Taking Very Little Time Off
Sage Tip: Investing in Yourself to Fulfill Your Purpose
3) Paying Yourself Last
Who pays themselves last? The worldwide adage is to pay yourself first. This is a great way to put at least 10% or more of your income aside to build an investment nest egg. But in this context of paying yourself last, this is the option of many successful billionaires – including the Berkshire Hathaway duo, Warren and Charlie.
What are the secrets of billionaires and their compensation choices? Munger and Buffett, have never taken substantial salaries and bonuses. We’re comparing this to other CEOs of businesses the size of Berkshire Hathaway. The two contrarian investors never paid themselves any hefty dividends either. They have systematically demonstrated great return on assets and return on shareholder equity over the years for investors.
Sage Tip: The Magic of Compound Interest: How To Grow Your Money
Paying themselves last, have turned them into billionaires. Investors have trusted and held stocks in their holding business because of this. These long-term shareholders have refused to sell their holdings. This move has made Berkshire Hathaway the world’s most valuable blue-chip stock by all standards. It currently trade upwards of $546,907 per share (December 2023).
Financial Altruism That Make You a Billionaire:
- Average Executive Compensation
- Little to No Dividend Payments
- Absence of Big Bonuses
- Giving to Charity
- Personal Financial Modesty
A Few Parting Words about the 3 Billionaire Secrets
Billionaires are different from us. You can be sure that Munger and Buffett got that way by thinking differently. They have carried out their capital allocation vocation to build massive wealth for shareholders – as well as for themselves. What are the secrets of billionaires that make them special? Their wealth is a result (and consequence) of the value they’ve created for people. They got rich only after enriching others. The cart is never placed before the horse.
These three (3) paradoxically valid yet strange traits can be followed by everyone. They’re virtues that are uncommon in a fast paced world of greed and fear. This however reflects the mindsets that billionaires like Charlie and Warren have. You can create massive wealth by daring to be different.
Which of these 3 things have you adopted personally? Please comment below and share your empowering testimonials.
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