The Snowball

I read “The Snowball: Warren Buffet and the Business of Life” recently.  The Snowball is about the power of compounding. How Warren Buffet has applied it to his money, his business and his relationships.

I couldn’t have though of an more apt name. Now this is a person who does not use email or computers.  Rather serendipitously I also saw “Becoming Warren Buffet” the documentary on his life.  I am blown away by his simplicity.

Here is a person who doesn’t work for money and has been tap dancing to work for over 50 years. Surely We can learn something from him.

Health – We have one body and one mind. Take care of it. Warren Buffet doesn’t drink alcohol and exercises every day. What did you do today to take care of your health?

Reading – Warren Buffet is a reading machine, reading 500 pages every day. Transforming information into knowledge. Reading is one of the best investments we can make. What have you read recently?

Leverage  – Warren  Buffet transformed Berkshire Hathaway from a struggling textile company to Global conglomerate with the power of  Leverage. He was the first to use insurance premiums to buy public companies rather than invest it in bonds.  The premiums effectively were other people’s money (OPM) . Premiums collected for years before any payouts were made. How can we find ourself in a situation of leverage? I can think of automation, effective teams and unique knowledge.

Moats – Warren Buffet is a master of investing. He is an expert identifying companies with moats that are hard to breach. A moat can be thought of as an unfair competitive advantage. Berkshire is a company with a huge moat. Each time an iPhone is bought, a Coke is consumed, a Geico insurance policy is purchased and much more Berkshire gets a part of the profit. What Moat are we creating with our skills?

Time- He gives his investments time. Think Decades. What was the last time you thought about something in a decade timeframe? When we think and act in the long term the power of compounding can take effect. This applies to money as well as knowledge.

By being 1% better each day we can have an outsize impact over our lifetime. Good luck on this journey!

“Life is like a snowball. The important thing is finding wet snow and a really long hill. ” – Warren Buffet

 

 

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