Warren Buffett’s 10 classic ideas, learning to think like him

1. First understand, then act

The first one may be obvious. Warren Buffett put it very simply:

Never invest in businesses that you do not understand.

——Warren Buffett

 Never invest in ideas that you cannot understand.

You often see people who want to become artists, musicians, or other creative fields and one of their first impressions is that in order to be successful; they need to spend money on the best equipment.

People who like to paint will think that to become a good artist, he needs to spend thousands of dollars to buy the latest graphic tablet with integrated screen. Similarly, a new guitarist will also spend huge sums of money to buy expensive music equipment endorsed by a superstar.

This is not right. You don't need fancy equipment. A good musician can even play the worst guitar beautifully. A great artist can surprise you with an old ballpoint pen and a piece of shredded paper.

First of all, don't put your hard-earned money into such endeavors. Make sure you are determined to meet the challenge and can stick to it.

You can consider spending some spare money to invest in courses and training instead of expensive equipment. The equipment may be damaged at some point, but the lessons you learn will always be with you.

This leads to Warren Buffett’s next piece of advice, which is also the one most frequently cited-

2. Invest in yourself

Warren Buffett himself has said many times that this is the best advice he can give others.

The most important investment you can make is to invest in yourself.

——Warren Buffett

You are your greatest asset. Any investment that can help you improve your skills and learn new things is a worthwhile investment.

You can always monetize your knowledge-whether you learn programming through intensive training courses or a second language, you are now proficient enough to be a freelance translator.

By investing in improving your own skills, rather than buying new tools, you will become a more valuable asset for a long time to come.

There is a famous saying: It is better to teach people how to fish then  to fish for them

By focusing on improving your skills and spending a little time every day to learn new things, you can open up new business opportunities for yourself, enter new markets, and discover new possibilities.

3. Focus on one thing

Some of us may be good at doing several things at the same time. However, when you choose a career or something you want to pursue seriously, you should not be distracted elsewhere.

In the investment field, many people are often advised to "spread" their assets, as the old saying goes: "Don't put all your eggs in one basket."

For Warren Buffet, this suggestion is futile. He replied:

Diversification is the protection of ignorance. If you know what you are doing, there is actually no need to diversify your investment.

——Warren Buffett

If you do one thing well, you don't need any backup plan. They only consume your energy, and you could better invest those time and energy in what you are doing.

For people like me, this means focusing on one thing and sticking to it. What I personally lack sometimes is the effort and self-discipline necessary to persist in doing one thing. I didn't get the result I expected right away, so my motivation dropped and I invested less and less until I gave it up completely.

Success is not achieved overnight. If we want to succeed, we must put in a lot of effort. If you don't make any immediate progress, don't be discouraged. Keep going and you will see results sooner or later.

Don't be distracted to do other things. If you are too distracted on your main goal, you will waste time, and it will even take you longer to reach the goal, which may make you even more discouraged.

4. The meaning of price and value are not the same

It is often difficult for us to find something at the right price. But Warren Buffett believes that we should not prioritize price at all. Instead, we should focus on the value derived from it.

The price is the price you pay. Value is what you get for the price.

——Warren Buffett

In fact, this sentence applies everywhere, not only in the field of investment. Don't just see the price tag, but also the value behind it. Because the two are not always the same.

You can find two marketing courses. The price of a two-hour course is US$40, and the price of another course of approximately the same time is US$250.

From the price tag, the $40 course is much cheaper, so what is the quality? You will most likely learn something that is outdated, or something you could have spent an hour learning on your own on Google.

At the same time, more expensive courses may cost you a lot of money now, but the knowledge and skills they share can earn you ten times that in your future.

Ignore the price (whether it is cheap or expensive) and only try to estimate the real value you get from the payment. This is the basis for the most decision-making.

This "law" also applies to you as a freelancer. You may think that setting a cheaper price for your work will have more benefits. For example, there will be more customers willing to pay, so there will be more income overall. But you probably underestimated your true value. You may have made some money through excellent work, but have you really made the money you deserve?

If the quality of the things you provide is good enough, higher prices will not necessarily turn consumers away. Some people may decide not to adopt you because you are "too cheap". Although it may seem counterintuitive to ask for more than your competitors, you will find it worthwhile.

5. Don't neglect quality just to save money

The following advice is part of Warren Buffett’s personal investment strategy, but it is not just for acquiring companies. It is far better to buy a good company at a reasonable price than to buy a reasonable company at a good price.

——Warren Buffett

This article is somewhat similar in concept to the previous suggestion on price and value. Your first reaction maybe is to choose a cheaper option. But cheaper does not always mean better. 

When my coffee machine broke down (a cheap $10 coffee machine in the store), we went to buy a new one. I took a fancy to a coffee machine from Nescafé, but it was priced at more than $80, so we decided to change to a $20 coffee machine, thinking that it Is merely a coffee machine and we can use the money in better places.

In about 3 years, this cheap coffee machine broke down. We replaced it with another cheap coffee machine for $15 in accordance with our philosophy, and we did that several times. In the end, we spent a total of more than 100 US dollars on the coffee machine, and then used it for a few months on average before having to replace it with a new one.

In the end, we chose an expensive coffee, which is not only of good quality, but also tastes better subjectively.

If we had long understood the difference between price and value, we could have saved some money.

Therefore, be sure to keep your eyes open when facing cheap offers. You may be familiar with phone shopping and the "unbelievable" offers they offer you. "This amazing mattress costs $250, since it is on fire sale, so you can buy it now for only $100!"

This is a common marketing tactic. The mattress was not worth $250 from the beginning, and the company certainly wouldn't spend that much money to manufacture or import it. But they make you feel an urge to buy.

So, don't be fooled by things like discounts, premium packages.

Don't buy a mediocre "company", just because they offer you a good price. Look at what is hidden behind. Then make your judgment.

6. Learn to say "no"

This is also a lesson you learn from people who want to help you become a better entrepreneur, freelancer or employee.

Especially when we first started working, we wanted to please everyone. We tend to promise any help others might ask of us. Our workload exceeded our capacity, and as a result, we were under more and more pressure, but we did not receive the gratitude or recognition we expected. The difference between successful people and truly successful people is that the truly successful people say no to almost everything. You must control your own time, and you cannot let others set your life schedule.

——Warren Buffett

The most difficult thing—especially when you try to become your own boss through freelancing and entrepreneurship—is to stick to your position. You need clients, so objectively speaking, you will accept most of the job offers you get, no matter how ridiculous they are.

If we say "yes" too often, we won't get the recognition we expect. Sooner or later someone will abuse this fact. The price we pay is unpaid overtime, work more than we get paid, and solve problems for others for free. Our personal morale and private life will be greatly affected, and we will drift further and further away from our dreams.

Learn to say "no". Some people may think you are unreliable or selfish. But in any case, these people are not good partners for your career. To others, your ability to refuse may even be attractive. You know your worth, and you stick to your position. People will accept the fact that they have to pay for your services. In every office, there is a guy who does everything for everyone. He came early and left late. Don't be that kind of person. Believe me, he must be unhappy when he goes home.

7. Don't blindly believe in others, especially those who want to "help you"

Almost everyone has an ulterior motive. If you are as naive as I am, you will often fall in love with people who look like saints, and they just forcibly give us their agenda.

——Warren Buffett

Now there are those big swindlers who fool you with their’ success’. Who doesn't want to make money every day? But if you believe those who claimed that they succeeded, then congratulations, you have been conned by them.

Be careful with the people you trust and the suggestions you adopt. Try to observe what they did and how they did it. If they preach the same thing over and over, they may be eager to get money out of your pocket.

Chances are that you help them more than they help you.

8. Invest in things that align with your own values

Warren Buffet mainly buys stocks in companies he personally likes, and he also agrees with the ideas of these companies. He said: Why not invest your assets in a company you really like?

——Warren Buffett

It feels great to make money with something. But if you are not fully committed, you will quickly lose your initial passion. If you want to be a writer, don't ignore the subjects you really like and just cater to the market.

Don't rewrite a sentence that you think is good because someone tells you they don't like it.

No matter what you do, you should put yourself and your own satisfaction first. If you feel trapped by a job you hate, don't waste time complaining. Don't think that there is no way out. There is always a way out. Although finding a way out can be difficult, if you focus, you can make changes—remember, find something you like to do.

If we like to do something, it will be ten times easier to do.

Don't sell your soul to make some extra money, remember to buy only the companies you like.

9. Don't stay too long in the past failures

You may have lost a customer because you asked for "too much money" (in their opinion), or an article you wrote didnt receive any attention.

Or you did something that you regret afterwards. But you have to know that even Warren Buffet has experienced failures. In the business world, what you see in the rear mirror is always clearer than what you see on the windshield.

——Warren Buffett

It is easy to find mistakes afterwards. It's just as easy to indulge in past failures too much. It's one thing to learn from your mistakes. This is normal, and it is the main motivation for us to try to do better next time.

However, if we are too entangled in past failures, we may subconsciously let ourselves face more failures in the future. Rather than spend time on the wrong place, it is better to try to improve your program and try again.

It's the same as Warren Buffett's rear mirror metaphor: if you drive too fast and miss a good opportunity, you may end up seeing this opportunity getting smaller and smaller in the rear mirror.

But if you look back for too long, you may accidentally miss your second chance.

So, don't look back for too long.

10. Don't put success and money above everything else

To be honest, for a person with more than $80 billion in assets, this sentence seems easy to say, but it is still true. For Warren Buffett, money itself is not a true sign of success: If you are my age, no one has a good impression of you, and I don’t care how many bank accounts you have, your life will be a disaster. Among the billionaires I know, money only allows them to show their basic qualities. If they were bastards before they were rich, they are now bastards with a billion dollars.

——Warren Buffett

There is nothing wrong with dreaming of becoming a millionaire or billionaire. We are all fighting for success. The worse your financial situation is, the more excited you are when you imagine huge wealth.

The most important thing here is to keep your mind in the right place. Don't sell yourself to make money.

You must know the phrase "money can't buy happiness", but you are often refuted by saying, "I would rather sit in a Lamborghini and cry than on a rusty bicycle."

I don't care where you cry. The bottom line is, you are crying. There is a big problem in your life. All the money in the world is not enough to solve this problem.

Emotionally, I agree with this suggestion. I am surprised by all millionaires and billionaires. But only those who show human dignity and admirable character, I will respect them. Warren Buffett is one of them. Elon Musk is another example of doing everything possible to achieve good goals.

I wish you all the best. 

Part 2: https://routetofi.blogspot.com/2021/10/warren-buffetts-time-management-free-er.html