Warren Buffett Gave Us a Few Investment Tips Over Lunch
By Cazzie Palacios Brown, MBA/MS ʼ18
Michelle Gross, MBA/MS ʼ17
Warren Buffett made his first investment at age 11, just five months after the bombing of Pearl Harbor. When we spoke to him last month, he said this was his biggest missed opportunity: “Not starting to invest earlier.”
It was the first of many lessons we would hear from Mr. Buffett during several hours spent with him in Omaha last month over lunch and a fireside chat with 20 other Michigan Ross students.
Despite his wealth, fame, and success, Mr. Buffett was incredibly humble and relatable. He shared insights and lessons from his professional experience and also offered us advice for a life well lived.
Mr. Buffett lives by the investment thesis, “the world will do well over time.” He pointed out to us that, despite two world wars, flu epidemics, and other challenges, the Dow Jones Industrial Average has risen from 68 at the beginning of the last century to more than 15,000 today.
In terms of what to buy, Mr. Buffett classifies potential investments into four categories:
|Unimportant and Unknowable||Important and Unknowable|
|Unimportant and Knowable||Important and Knowable|
He sticks to investing in the “Important and Knowable” category, and does not believe in getting sidetracked by microtrends like the internet bubble. It’s worth noting here that he’s so committed to this, he continues to use a flip phone and is still figuring out the voicemail function.
We toured three of the 80 subsidiaries that Mr. Buffett has invested in through Berkshire Hathaway, all of which he considers part of his “important and knowable” quadrant. Oriental Trading Company (OTC), Borsheim’s Jewlery, and Nebraska Furniture Mart. There we met with executives such as Borsheim’s CFO Erin Limas, and OTC CEO Sam Taylor (who also happened to appear on an episode of Undercover Boss).
On the issue of impact investing, or investing in businesses with a social cause, he “disagrees with many of his friends” because he believes “you can only maximize one variable at a time: profit or impact.” Mr. Buffett told us he focuses on profit (though emphasized the incredible value of good business and integrity), but he has big plans to use most of his accumulated wealth for philanthropy. You’ve heard of the Warren Buffett and Bill Gates Giving Pledge, right?
Mr. Buffett’s views on impact had us thinking about and discussing what social impact means and how it can be created by organizations, corporations, communities, and society as a whole. It sparked us to discuss and debate about where responsibility lies to create a positive impact in the world, and it raised questions about personal leadership styles, and the types of impact we seek to create in the world.
We are grateful for Mr. Buffett’s wisdom as we seek to create impact in our careers and life, and we’ll take his words with us along that journey.
The trek to visit Mr. Buffett and the Berkshire Hathaway family was arranged and sponsored by the Ross Investment Management Club.
Cazzie Palacios Brown and Michelle Gross are students in the Michigan Ross Full-Time MBA program. Cazzie and Michelle are both pursuing dual degrees through the Erb Institute for Global Sustainable Enterprise.