Berkshire Hathaway 2008 Annual Meeting Audience Question # 46

Warren and Charlie’s advice for young people

Warren Buffett:

Number 8.

Audience Member:

Good afternoon. I’m (the sound in this part of the video is inaudible) from Apopka, Florida. I would like to thank you for this wonderful opportunity to learn so much more about finances and, at the same time, have a wonderful time. It’s been fun.

Warren Buffett:

That’s great.

Audience Member:

I teach at Valencia Community College in Orlando, Florida. I teach office administration and business.

I applaud my students for investing in themselves by enrolling in college. I also want to stress financial independence and financial freedom. I do this by telling them that slow and steady wins the race; also, good, sound financial management; and then the law of reciprocity.

I have them track every expense over a period of time. Also they buy, theoretically, one stock and track that, too, over a period of time. We keep track of the current financial news, current news, and also they have research papers.

Thank you.

They research FICO scores, the credit reports, Clark Howard, Suze Orman, the top ten billionaires, not because…

Warren Buffett:

I think…

Could you move onto your question, then, please?

Audience Member:

Yes.

Warren Buffett:

But thank you.

Audience Member:

OK. What else should I be doing to lead them… to make sound financial decisions and to have happy, sound financial life?

Warren Buffett:

I’m ready to hire your entire class right now.

Well, I think you’re telling… you’re giving them some very good advice. I think that the most important investment you can make is in yourself.

I mean, very, very, very few people get anything like their potential horsepower translated into the actual horsepower of their output in life.

And potential exceeds realization to just an enormous factor with so many people.

And I… one illustration you might try with your class… I tell them this when I talk to high school groups… just imagine that you’re 16 and I was going to give you a car of your choice today, any car you wanted to pick, and… but there was one catch attached to it… it was the only car you were going to get in the rest of your life, so you had to make it last there. You can pick out the fanciest you want, a Maserati, whatever it might be.

How would you treat it? Well, of course you would read the owner’s manual about five times before you turn the key in the ignition. You’d keep it garaged. Any little rust, you would get taken care of immediately. You’d change the oil twice as often as you were supposed to, because you know it has to last a lifetime.

And then I tell the students, you get one body and one mind, and it’s going to have to last you a lifetime, and you better treat it the same way, and you better start treating it right now, because it doesn’t do you any good to start worrying about that when you’re 50 or 60 and the rust… that little speck of rust… has turned into something big.

So anything your students do to invest in their mind and body… particularly your mind… we didn’t work too hard on the bodies around here, but… you know, it pays off. It pays off in an extraordinary way.

Your best asset is your own self. And you can become, to an enormous degree, the person you want to be.

When I get classes in universities, I just ask them to imagine they were going to buy one of their classmates to own 10 percent of for the rest of their life. Which one would they pick?

They wouldn’t pick the one with the highest IQ, or necessarily the one with the highest grades.

They’d pick the person that’s going to be effective.

And the reason people are effective is because other people want to work with them. They want to be around them. And other people they don’t want to be around.

And those are qualities than an individual picks up… being generous, being humorous, being on time, not claiming credit for more than you do but rather less than you do, helping out other people… all kinds of human qualities that turn other people on, and then there’s things that turn other people off.

And those are habits, and they’re the habits that you pick up when they’re the age of your students. The habits they have today will follow them throughout life, so why not have good ones? So that’s the only message I would give your students.

Charlie Munger:

Well, I’ve got a specific suggestion that answers your specific question. I would add to that extensive repertoire of yours by teaching them to avoid being manipulated to their disadvantage by vendors and by lenders using the standard tricks of the vendor and lender trade.

And you couldn’t start with a better book than Cialdini’s “Influence,” (you can get a copy of the book here) and I think Bob Cialdini, who is a shareholder, is here somewhere in this audience.

And so I have a new textbook to… I suggest you add to your class… which is Cialdini’s “Influence.” And he’s just got a new book that’s coming out and for sale in Omaha today, I think, for the first time, and that’s called “Yes.” (you can get a copy of the book here)

So here’s two books that I suggest you add to your class.

Warren Buffett:

OK.

Looking for an offline, PDF copy of all shareholder questions carefully arranged into specific topics such as How to properly evaluate a company for potential investment, Intelligent Investing and Secrets to achieving Success and Happiness? Click on the image below to learn more.

Q&A with Warren Buffett and Charlie Munger: A Compilation of All Shareholder Questions and Answers from The Berkshire Hathaway Annual Shareholder Meetings

Click here to return to the Q&A topic list. Alternatively, you can proceed to the next or go back to the previous question.

Don`t copy text!