Warren Buffett: 9 Daily Habits of Warren Buffett [Entrepreneur, Highly Effective, Motivation, Rich, Success]

by Isaac Fox

Only 2 things matter to get any desired result. Willingness to do and action. The majority fail in executing the second.

80% of results come from 20% of the effort. That’s the Pareto principle as we know.

Warren’s net worth stands at ~$83 billion as of January 2018. Abilities to pick stocks, understanding of the economics of the business and perseverance allowed him to make enormous amount of wealth. However, he is committed to donating more that 99% of his wealth to charity during his lifetime or at the time of his death.

These research supported habits have proven to be of complete turnaround as they relate to how the human brain functions and guides us on the benefits we experience on their implementation.

“The man who does not read has no advantage over a man who cannot read” – Mark Twain

Understand that 75% of self-made millionaires report reading at least 2 books a month. And, Warren too showed tremendous inclination towards reading since early childhood.

By 5th grade, he read “1939 World Almanac” which became his favorite book, given by his is aunt Edie.

“Never in the history of the United has the time been so favorable for a man with small capital to start his own business as it is today, but,” It continued, “you cannot possible succeed until you start!”

“The way to begin making money is to begin...Hundreds and thousands of people in this country who would like to make a lot of money, but are not making it because they are waiting for something to happen.”

But he got his invaluable asset; his breakthrough in the world of investment that he often mentions in his interview and I also agree with (because I am an Investment Banker) is through the book called “Intelligent Investor” written by what he considers his “Mentor”, Benjamin Graham. Published in 1949, it is still a practical counsel for all types of investors including the cautious (“defensive”) or the aggressive (“speculative”).

“You are not only taking a glimpse through his critical moments of success and failures and the techniques deployed, you are virtually experiencing those moments as if it were your own - this is the trick”

“The stimuli that are created while you are engaged in a reading process are almost similar to that of the real world experiences and it is as if you are experiencing those moments”

The neural wires that transmit electrical messages from cell to cell in the brain are coated with a fatty layer called myelin.

Much like the insulation on an electrical wire, myelin stops current from leaking out of the wire and boosts the speed with which messages travel through the brain–the higher quality the myelin, the faster the messages travel

The gray matter represents information processing centers in the brain, and white matter represents the network or connections between those processing centers.

“In a six-month daily reading program from Carnegie Mellon, scientists discovered that the volume of white matter in the language area of the brain actually increased”

Oxford scientists proved that the process of reading trains the cognitive abilities of the brain. This is because while reading blood enters the areas of brain that require concentration and cognition.

Reading as a whole is not confined to any particular domain like Finance or Fiction. It is just an exercise.

They reported that they could prioritize daily things better now. This is because as the connections in the brain are re-wired, management of disparate events is improved.

Given that everyone has 24 hours, why is that some evolve smarter at their work and demonstrate practical growth? This is because they know what to do it as their brain is effortlessly guiding them what NOT to do and what to FOCUS ON.

Reading establishes and strengthens both the hemispheres of the brain and re-wires broken connections. As the brain can co-ordinate better, it manages decision making effortlessly.

Pick a piece of most engaging read – Ideally something that would feel “immersed in it”.

Put you smartphones way.

No internet & television.

Reading rhythm! Read about 10 pages in a go to “connect” with the ideas of the author.

After you have reached your pause break in the interval of min. 10 pages, look back and try to recall what you have read and what you remember.

This is the test of not “how much do you remember” but “how much do you like the story and what part of it” It’s really interesting.

Just read 30 minutes a day for 7 days straight at the same time as the prior day whenever you are free. That’s it.

The technical process is that no other habit is as fiercely accepted by brain as reading is because our brain is selfish – it knows that it is developing itself. The trick is to think for long term, first complete the 7 day process and on the 8th day you will be tempted to pick up a book and start reading. Then it’s effortless.

often quotes that Albert Einstein once said, “Compound interest is the 8th wonder of the world. He, who understands it, earns it ... he who doesn't ... pays it.”

Compounding is the process of re-investing your earnings in your principal to earn exponential return as the next growth is on a bigger principal, then following this processes of adding the earnings to the principal.

“Aside from the psychic income associated with discovering the New World,” he wrote in a letter in 1963, “it wasn’t exactly another IBM”.

He often clubs reading with compounding, and adds, “Read 500 pages like this every day,” said Buffett, holding up a bunch of reports and trade publications. “That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”

“Due to 3 things: Living in America for the great opportunities, having good genes so I lived a long time, and compound interest.”

money today is worth more than money tomorrow as money itself loses in value due to inflation (increase in prices).

Personal use of compounding would be to be particularly regular in doing small good habitual things. Understand that compounding is nothing but using the benefit of using the previously done thing to further amplify it and produce greater benefit.

The ultimate trick is to understand and grasp the fact that whatever we decide in life, we have to be consistent in that and ignore any short term benefits from it.

“It’s not necessary to pick every stock that comes in our way”, he says, “we just have to pick and buy when we understand it and when it convinces us of its on-going demand 120 years from now, we but buy it when it falls inside out Circle of competence!”

we should only expect to make money over things that we really understand.

He gave a few examples to explain this – He understands the economics of “Ridley Chewing Gum” will look like 10 years from now. He says “Internet is going to change everything…but it not going to change the way people chew gum and it is not going to change the way the flavors they chew.”

It is simply the fact that you don’t have to worry about things that you don’t understand or you like but you don’t understand. You just have to take action over things that you are certain of.

Warren uses this example to advise that investing is a no-called strike game and that you don’t have to invest in every stock, but to wait, analyze and understand the economics of stock and invest only if you are convinced.

"I am no genius, but I am smart in spots, so I stand around those spots"

It is important to understand that the fact that you will succeed with your strength and fall by your weaknesses.

focus on things that you have an expertise or area where you already have grip of.

There is no solution outside, there is information but the solution is always inside of you. All you need is to take a break and think for yourself. Take a bath!

Essence of the above story – take a break and ask yourself – what is your competitive strengths and what is the perimeter of that competence?

The lesson from this habit is to take a break and find your own circle of competence! And then act! Everything falls in place and you would find yourself on the right path.

Despite being the best investor in the world and in the world of stock markets, Warren Buffett says living far from Wall Street actually helped him.

"It's very easy to think clearly here. You're undisturbed by irrelevant factors and the noise generally of business investments," Buffett said. "If you can't think clearly in Omaha, you're not going to think clearly anyplace”