The Oracle Speaks

Warren Buffet In His Own Words

Edited By David Andrews

The book itself is simply a collection of sayings, statements & mottos from the Oracle of Omaha himself.

Before proceeding it is useful to understand some key facts about Warren.

• He has a net worth of over $80 Billion at an age of 88.
• Buffet’s extreme wealth came later in life with his net worth breaking the $1 Billion mark in his late 50s. 94% of his wealth was earned after he was 60.
• Buffet got rejected from Harvard Business School following his graduation from the University of Nebraska. As a result, Buffet attended Columbia Business School where his idol & father of value investing Benjamin Graham taught.
• He currently lives in the same house that he lived in since 1958.
• Buffet estimates that he spends 80% of his time reading. When asked what his key to success was Buffet states:

“Read 500 pages a day. That’s how knowledge works. It builds up, like compound interest”.

On Cost-Consciousness

We cherish cost-consciousness at Berkshire. Our model is the widow who went to the local news-paper to place an obituary notice. Told there was a 25-cents-a-word charge, she requested “Fred Brown died”. She was then informed there was a seven-word minimum, “make it ‘Fred Brown died, gold clubs for sale.’”.

On Credit

Credit is like oxygen. When either is abundant, it’s presence goes unnoticed. When either is missing that’s all that is noticed. Even a short absence of credit can bring a company to its knees.

On Wealth

What money does is magnify you. Whatever kind of person you are going in it magnifies both … good and bad tendencies. Money gives you a chance if you’re a slob to be a big slob. On the other hand, if you’re inclined toward doing good things, it gives you the power to do a great many good deeds.

On The Ovarian Lottery

Buffet speaks a lot about the Ovarian lottery and how he was fortunate to be very lucky in this regard. Buffet states that he was lucky enough to have a talent (“Valuing businesses”) which was highly prized in the society he was born into. Taking from the philosophy highlighted in John Rawl’s “A Theory of Justice”, Buffet makes the point that:

Let’s assume that it was 24 hours before you were born and a genie came to you and he said ‘I’ve got to design the world in which you’re going to live and I decided it’s to tough…you should design it”. You have to figure out what the social, economic and governmental rules should be that you are going to live under. The genie says that there is one catch which is the fact that you do not know whether you’re going to be born black or white, male or female … all you know, is you’re going to take one ball out of a barrel that’s got 5.8 billion”… “You’re going to participate in what I call the ovarian lottery.”… I think that’s a good way to look at social questions, because not knowing what ball you’re going to get, you’re going to want to design a system that includes lots of goods and services, because you’re going to want people — on the balance — to live well. You’re also going to want a system that … does not leave behind a person who accidentally got the wrong ball.