Amid the financial woes, a simple man wins

At an AGM of Berkshire Hathaway, it was reported:

Warren Buffett: big is bad for banks
Dominic Rushe, Omaha

THE big banks have become too large to manage their own risks properly, Warren Buffett, the world’s most successful investor, warned last night. Their size had led to the recent meltdown in financial markets.
Buffett’s business partner Charlie Munger said a “crazy culture of greed and overreaching” had led to the excesses of the credit crisis and was “counter-productive for the country”.

Speaking at the annual meeting of his company Berkshire Hathaway, Buffett said: “We have clearly seen in the past year situations where, if the chief executive knew what was going on, he didn’t let on.” Sometimes, Buffett said, it was “less embarrassing to say you didn’t know what was going on”.

He believed that the worst of the global credit crunch was over, but the after-effects would continue to be felt by homeowners.

Munger said the credit crisis made the collapse of the energy giant Enron “look like a tea party”. After the Enron crisis, the American government brought in new legislation to clamp down on financial fraud. “Now it’s turned out that they hit an elephant with a peashooter,” said Munger.

Up to 32,000 people are believed to have attended this year’s annual meeting of Berkshire Hathaway in Omaha, Nebraska. Ahead of the meeting, the company reported a sharp fall in first-quarter profits as underwriting income fell. It also revealed $1.7 billion (£860m) in unrealised derivatives losses. The company’s quarterly profit plunged 64% to $940m.

There was no doubt even the great Warren Buffet cannot be right all the time, and was affected by some of his investments. But the fact that he is involved in the rescue of some of the biggest companies in deep trouble, shows his acumen in being able to stay away from trouble by sticking to his simple way of life. It is worth repeating his unusually simple philosophy:

There was a one hour interview on CNBC with Warren Buffet, the second richest man who has donated $31 billion to charity. Following are some very interesting aspects of his life:

1. He bought his first share at age 11 and he now regrets that he started too late!
2. He bought a small farm at age 14 with savings from delivering newspapers.
3. He still lives in the same small 3-bedroom house in mid-town Omaha, that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or fence.
4. He drives his own car everywhere and does not have a driver or security people around him.
5. He never travels by private jet, although he owns the world’s largest private jet company.
6. His private company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis.
7. He has given his CEOs only two rules.
Rule No.1: Do not lose any of your shareholder’s money.
Rule No.2: Do not forget rule No.1.
8. He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch Television.
9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.
10.Bill Gates, the world’s richest man met him for the first time only 5 years ago. Bill Gates did not think he has anything in common with Warren Buffet. So he had scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.

His advice to young people:

“Stay away from credit cards (bank loans) and invest in yourself and Remember:
A. Money doesn’t create man but it is the man who created money.
B. Live your life as simple as you are.
C. Don’t do what others say, just listen them, but do what you feel good.
D. Don’t go on brand name; just wear those things in which you feel comfortable.
E. Don’t waste your money on unnecessary things; just spend on them who really in need rather.
F. After all it’s your life then why give chance to others to rule our life.”