Why Warren Buffett Embraces Not Knowing Everything And You Should Too

Image Credit: Talkmarkets

While the new generation of billionaire entrepreneurs like Mark Zuckerberg and Elon Musk seem to get involved in everything from space travel to foreign politics, Warren Buffett, the world’s most successful investor and one of the world’s richest men, embraces not knowing everything.

The “Oracle of Omaha” spends 8 hours a day reading, doesn’t use a computer and only invests in companies and industries that he understands. He has generated a 20.9% return on his investments from 1965-2017, more than doubling the average return of the stock market!

In this article, I will look at why Buffet embraces his lack of knowledge of things like tech and complex derivatives and how the average person can apply these 2 pieces of advice to achieve more success!

The most recommended book in silicon valley

“The Outsiders: Eight Unconventional CEOs and Their Radically Different Blueprint For Success” by William Thorndike is the most recommended book among the Silicon Valley crowd and focuses on unusual CEOs such as Harry Singleton of Teledyne and Warren Buffett of Berkshire Hathaway whose returns for investors trounced their peers.

The book found that all of these CEOs used two rules for making decisions:

  1. They view their most important job as the allocation of resources. That sounds a little technical but basically, it means making sure that both financial resources like money, stocks, and bonds and human resources like employees, management, and talent are all being used for their best and most efficient purpose.
  2. They think like investors, not managers. While a manager might need to think about the day to day workings of a business (taking up valuable time by having to learn things like astrophysics from youtube videos for example), an investor simply has to be able to evaluate what something is worth and what others are willing to pay for it. Because of that, investors can focus on creating value to raise the overall stock price.

“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” – Warren Buffett

Let’s look at two ways you can apply these ideas to your daily life:

1. Resource allocation can make you more successful

When I say resource allocation, what I really mean is being efficient with your money, time and energy. One of the biggest problems we have as humans is inefficiency! We waste time,…

read more…