In this post you will learn:

• How to think like Warren Buffet
• What lessons can Warren Buffet teach you.
• What are the best advices from Warren Buffet?

There's an amazing HBO documentary called Becoming Warren Buffet. It's a great way to spend an extra hour (I spent it while on a plane). In this post, I will summarize what I took out of it.

Be Patient

• Be patient. Everything you do takes a long time to happen especially when investing.

• Investing is like playing baseball, except you have infinite strikes. You can sit all day just thinking about what to do next. There is no hurry. In a way, is the best business to be in, since all you need to do all day is wait for the perfect opportunity.

• When his kids were growing up, he wasn't rich or famous. Granted, he was well-off but not a billionaire. His net worth was 25M$ at 39 years old.
  You can really see the compounded interest took effect in his 50s.

Your most valuable asset is yourself

• He once asked high school students

What would you do if you can pick a free car? And you get to pick any brand.

But the catch is you need to keep it for your whole life. Would your behavior change because of this? Would be careful with it? Wouldn't you take the most care of it?

Now imagine that this car is your body and your mind. You only have one and you need to take care of it until the end of your life.

When investing, beware of yourself

• The most common risk for non-professional investors is your bad decisions. The psychology of investing makes it easy for your brain to take wrong decisions.
• The market can be imagined as Mr. market. He keeps shouting a bunch of prices for assets. He is very unstable and gets very excited when things are good and very depressed when things are bad. It's your job to figure out what the real price is.
• He has a poster about the 1929 crash in his office. A reminder about how the human psychology affect our decisions.

Don't spend money on stupid things.

• He does not feel like spending money on frivolous things. He is immensely cerebral. For him, money is just a way to keep scores.

Learning

• He spends about 5-6 hours reading everyday. In fact, his family thought he was too much in his bubble. His kids would complain he didn't spend a lot time with them. Or he didn't pay attention when they talk to him (since he was just thinking in his thoughts).

Love

Here's a quote from him about love:

• Love is a strange thing. The more you search for it, the more it escapes you. The more avoid it, the more it finds you.

Practical takeaway?

How can this be applied to personal finance? The biggest take away is

• You need a plan
• You need to work. Nothing comes without sacrifices or efforts.
• You need to learn

The latest point is why I am writing about this blog.

Becoming Warren Buffet

Warren buffet net worth over the years