The "Oracle" of Omaha

(It's three a.m., and I'm probably not as coherent as I could be, so there are probably more edits, additions, and revisions to come. My apologies.)

I am still in awe. Like I wrote in my facebook that sometimes, over time, or in person, your heroes can disappoint you. For two reasons: either you had unrealistic expectations of them, or you forgot that everyone no matter who they are is a human being, and human beings have flaws. Sometimes it's a combination of the two, but I can unabashedly state that Warren Buffett's one of my biggest heroes ever, and that he has not let me down.

The first thing in the 2 hour Question and Answer session, Warren Buffett begins by asking us to ask him any thing that we're thinking about, and he'll do his best to tell us everything he knows. He's a funny guy too, at many points during his responses he'd throw in a few jokes that really would make us laugh. No, we were not laughing at anything he said because he's Warren Buffett, but because he's a genuine guy, and being humorous is part of who he is.

My take on him is that he genuinely loves talking to students. I say this because he's let many students over the years visit him. We're definitely not the first, nor I don't think we're the last, but usually he doesn't let undergraduates visit him, so I feel lucky that as a freshman I got one of the rarest of the rarest of the rarest opportunities to go visit this man. He auctions off an hour or two of his time over lunch sometimes (like once or twice a year for charity), and people pay upwards of $600,000 for his time.

Well, I guess I should back up and start from the beginning (this looks like it might be a lengthy post). Warren Buffett is the second richest man in the world. Quite recently, this year actually, he has dedicated AT LEAST 85% of his wealth to charity. To the Bill and Melinda Gates Foundation, specifically. Additionally, he still lives in a house he bought in 1958, not a palacial castle, nor does he have a driver. He drives his own car, does mostly his own thing, and people with a fraction of his wealth act more pretentiously and more uncaringly than he does. Pretty much, he lives his life like a regular joe schmoe, even though he's richer than 99.999999 percent of us, like us. Wow.

I got up at 3:30 a.m. to catch the plane to Omaha, with a layover in Minneapolis. At around 12:15 p.m. that day, about a little more than 2/3rds of the group headed over to the Gallup Organization. They gave a presentation about their organization, and about the work they do other than polls. They talked about themselves as an organization, and about the work they've done for other companies. One of these things are the StrengthsFinder, which evaluates the five most prevalent strengths of an individual. The probability that two people would have the same general strengths are probably one in 34 million. Mine are Arranger, Learner, Adaptability, Responsibility, and Achiever (in that order).

Afterwards, we headed off to a place where we had a Q and A with Wally Weitz of Weitz Funds, which manages about 6 billion dollars in assets. We also learn that Berkshire Hathaway (Warren Buffett's company), briefly traded at over $100,000 a share, a momentous occassion for Buffett. Afterwards, we had a reception, and Warren Buffett himself made a surprise appearance for an hour!! He looked so comfortable talking with us. Lol, and LaMisha over there looks contemplative, for once ;).



Anyways, we rubbed elbows with a few of the business people over there for dinner, and then, quite suddenly, the big day comes and we're off to first visit Nebraska Furniture, and then go to Warren Buffett's headquarters and hear from the man himself. The CEO of Nebraska Furnitures (believe me, the store is HUGE, about at least five times bigger than the biggest Ikea), gave us a personal tour and a run down of how the business is managed and how they do so well to keep profit margins high and how they keep their dominance in their market place. They have close to 90+% (my estimate) dominance in a MARKET RADIUS of 250 miles! He let us ask any question we wanted to, and even rolled out a gigantic poster of Warren Buffett as a model for one of the products, a mattress!! haha.

Okay, sorry for all the details, but this is kind of my journal too! So now we're leaving this humongous beast of a store to see the beast of the investment world. Let me say that this guy's priorities are awesome. He doesn't go for lavishness, and he doesn't make money to spend money (except on charity), he does what he does because he's good at what he does (he considers himself a capital allocator), and simply does what he loves. How many other people are unhappy because they don't do what they love? And how many others are just superficially happy. For example... ask what would happen if you just take that person's money away... what would happen to them then?

During his Q and A session, Warren Buffett quite seriously talked about one of his friends there at Omaha. She's an eighty year old polish jew, and he said she doesn't have very many friends. Her reasoning, she told him, is "when I make friends, I can't help but think, if it became necessary, "would they hide me?"" And Warren Buffett added, there are people out there, who's kids out there would be oh so happy to point toward the attic and say my parents are up there. What kind of family, what kind of lifestyle is that... if you can't count on anyone to hide you if it came down to it?

One of the first questions from the group was about his private jet. Before he bought it, he used to speak out about his colleagues' extravagance. Now that he has one, he says, he appreciates it that much more because he wouldn't be traveling so much without it. He confesses that it was a hard decision to make, but then it's become worth it because otherwise without it, he probably would have to cut back on making deals and traveling. Therefore, even though he still feels it's extravagant, he could understand how, if you have the means, you would want one. In terms of everything else, though, he lives just like you or I would. He has a nice home, a nice car, he sleeps seven hours a day, reads the newspaper. He doesn't blow his money (aside from his jet), on other extravagances like living in Las Vegas or on showy incidentals that other people would. Man... you can admire his wealth, but you can't fault him for being inconsistent, at least on principle.

One person in the back tried to ask a question, and because he couldn't hear that prompted him to tell a story, or a joke. He complained about getting old, and how he was worried about his best friend and business partner (Charlie Munger), about his hearing. So, one day, he decided to ask Charlie across a room, to kind of test him, and Warren asks if they should buy Microsoft Stock. Warren doesn't hear Charlie respond, so Warren walks halfway across the room, and asks the same question, and he doesn't hear a response again. This time, Warren goes and speaks directly in his ear, and Charlie responds, "For the third time, Yes."

On Capital Allocation, Warren Buffett walked us through on how he evaluates companies. First of all, he looks for good companies that are underpriced that any idiot could run, because eventually, one will. He extended that reasoning to countries too. (get it?). He pulled out a book on Korean companies, and said that there are lots of investment opportunities out there in other countries, and some of them are just as transparent, or even more transparent, than American companies are. So he was thumbing through this book on Korean Companies, and in a few minutes he had a list of 20 companies that looked interesting. He took one company as an example. Now, some companies are underpriced for a reason. But he pulled out figures of around these: The company makes about 200,000 yuan a year. (let's suppose these figures are accurate, because I'm sure my memory on the specific numbers aren't). The Company has assetts worth about an extra 400,000 yuan, and currently there are X many shares being sold at a total stock evaluation of only 50,000. He thought that was ridiculous, so he invested, and eventually, other people figured the same thing as he did, and the total evaluation jumped up to about 300,000. After all, the yearly income was more than the previous stock evaluation!! Take into account the Korean currency against the dollar this past year, and he made a sweet 12% (or 20, I forget which), on top of what he already made on the company!! All this, from only one page of information from a book of korean companies. Genius.


Another of the stories he told us was his time with the richest man in Russia. He was deciding to invest between a Chinese company and a Russian company. Even though the Chinese government owned 90% of the stock, he decided that it was worth it to invest about $400 million in it and control about 1.25 percent of it. Now, compared to what the Chinese government owns, that's almost nothing, but he figured rightly that that investment would be better than the Russian one. About this time last year, he was having lunch in California with the richest man in Russia, giving advice on the Securities Exchange Commission in the United States because this Russian billionaire was worried about how obnoxious the U.S. government is. Only a few months later, the Russian government throws their richest man in jail, and tears his company to pieces. This man is in Russian prison to this day, and Warren Buffett moved on to his most moving part of his Q and A, and talked about how we've all won the ovarian lottery.

He spoke to the room, granted, it was filled with Harvard undergrads and Texas A & M business school students, and said we all have won the ovarian lottery. Imagine, before being born, if you were told to reach into a barrel with 6 billion tickets, and choose one. But wait, you are here, and most of you were born in America. Would you trade what you have, for, let's say a hundred potential tickets in the bucket? Heck no. Why would you? You're where you're at now, and if you did, half of it would be the wrong gender (because most of us would want to keep our gender), that eliminates about half, more than half of the tickets wouldn't get you anywhere because you'd be living in deep poverty, and only 1 if you're lucky, would land you a place in this world where you have an opportunity to do what you love and do what you do best to succeed in life.

So what happens when you win the ovarian lottery? Is it fair, that even before you're born, you're already separated into different paths and different lives? The reason why he gave to charity, is because he feels that those of us who are lucky are duty bound to still do the best that we can in life, and then do the best that we can for those who pull out the unlucky tickets. I'm not being as eloquent as I could be, and I'm definitely not doing Warren Buffett's words justice, but I hope the point is still there. I just hope I haven't mutilated it too badly.

Anyways, after his two hour Q and A, which was full of revelations, and he definitely didn't disappoint his listeners, he treated us to lunch at his favorite place, Gorat's. After which, even though he makes a bajillion bucks an hour, he was gracious enough, heck, patient enough with us, to take pictures with us, as many as we wanted, how we wanted. He did Charlie's Angels poses, and he even granted wishes to pose kissing someone's cheeks, and was just overall very charming, unpresumptuous, and kind. He was more like a grandfather, than an influential business man.

I feel very, very fortunate to have been able to meet my hero these past two days. He even said, during his talk, that what helped him start was that he would go to the offices of CEOs and Professors and people he admired, and talk and learn from them. He feels that there are some heroes out there that have a flaw that makes them fall from grace once their discovered. They aren't really role models, because he couldn't rely on them. He felt he was lucky to have good role models to follow that didn't disappoint, and I feel that lucky too.