TRAITS/CHARACTERISTICS OF WARREN BUFFET
COMMUNICATOR
FIGUREHEAD
DISSEMINATOR
RESOURCE ALLOCATOR
INNOVATOR
ENTREPRENEUR
TRUSTWORTHY
UNBIASED, MOTIVATOR
LIAISON AND SYMPATHETIC
RISK TAKER
PHILANTHROPIST
CONCERN FOR PEOPLE
EXTROVERSION
RATIONAL
HUMILITY
• Communicator-Warren Buffet is a skilled communicator
in all aspects of life. Communication is the real key of
leadership. Skilled communicators have an appreciation
for positioning in the business world. Warren Buffet is
experienced at positioning himself at the right place at
the right time. Warren Buffet has the understanding of
the people he is trying to reach and what he can and
cannot hear from the people
• Figurehead- As a CEO of the “Berkshire hathway, he
use to perform ceremonial and symbolic duties.
• Disseminator-Warren Buffet can send a message
through an open door and does not have to push the
message through a wall. Rational persuasion tactic is
being used here.
Resource allocator-Mr. Buffet's continual approach of
analyzing both possible investment choices, market trends,
and the ability to place management resources of the right
caliber in the right position has consistently brought this
investor to the forefront amongst peers and the
marketplace.
Innovator- At the core of every sound investor is a creative
innovator. In the number-heavy world of global investing,
innovative thinking is critical. Innovative investors decipher
future trends, spot likely winners by combining science
(financials) with art (acuity and perception) and
continuously mitigate risk.
• Entrepreneur-Warren Buffet's is a self empowered leader,
because he is loyal, sets goals, plans a strategy for
achievement, and stays committed until he accomplishes his
purpose. Up to date, he is the greatest stockbroker of all-time.
He is a very conservative investor that prefers to invest in
companies that sell name brand products that he uses.
• Trustworthy-He buys the company with the intentions of
keeping it forever. Usually, the management team of each
company is the same staff that sold it Warren Buffet from the
beginning. He stays loyal to his partners, and the team works
their best to keep him happy. inspirational appeal is shown
here.
• Unbiased, motivator-Warren “told ABC News
“Nightline” that being born into wealth did not entitle his
children” (Harris, 2006). In addition, he told Fortune
magazine that, “A very rich person would leave his kids
enough to do anything, but not enough to do nothing."
(Harris, 2006) In other words, he wants his children to
work earn their money and value hard work and smart
choices.
• Humility-In the year 2006, Warren’s first annual
donation to the Bill and Melinda Gates Foundation was
$1.5 billion and the rest was divided among the four
charities. He was the first person to make a donation
better than Bill Gates, the richest man in the world
• Liaison and sympathetic-The personality of Warren
Buffet ties to the Social Cognitive Level, because he tries
to understand and make sense of other people. He
observes the differences in social knowledge when
dealing with people. Social cognition refers to making
sense of ourselves, others, and how the information is
used.
• Risk taker- While the company suffered a rare decline in
net worth of $11.5 billion during the 2008 global financial
crisis, prompting Mr. Buffett to admit he “did some dumb
things in investments”, it bounced back strongly with a
$21.8 billion gain in net worth during 2009.
Warren Buffett
tends to be a
level 5 leader
Succession planning
Immaterialist
Simplicity
Philanthropist
• Philanthropist-He decided to donate 85% of his money
to charity. Warren Buffet is not a huge spender. In fact,
he still lives in the same house he bought 40 years ago.
• Concern for people-He buys the company with the
intentions of keeping it forever. Usually, the management
team of each company is the same staff that sold it
Warren Buffet from the beginning. He stays loyal to his
partners, and the team works their best to keep him
happy. inspirational appeal is shown here.
• Extroversion-Warren “told ABC News “Nightline” that
being born into wealth did not entitle his children” (Harris,
2006). In addition, he told Fortune magazine that, “A
very rich person would leave his kids enough to do
anything, but not enough to do nothing." (Harris, 2006) In
other words, he wants his children to work earn their
money and value hard work and smart choices.
Rational-Warren “told ABC News “Nightline” that being
born into wealth did not entitle his children” (Harris,
2006). In addition, he told Fortune magazine that, “A
very rich person would leave his kids enough to do
anything, but not enough to do nothing." (Harris, 2006) In
other words, he wants his children to work earn their
money and value hard work and smart choices.
• Humility-In the year 2006, Warren’s first annual
donation to the Bill and Melinda Gates Foundation was
$1.5 billion and the rest was divided among the four
charities. He was the first person to make a donation
better than Bill Gates, the richest man in the world
• Superior business leader and American investor Warren
Buffett is often called “Oracle of Omaha” or the “Sage of
Omaha” and philanthropist
• Warren Buffett is known for his economical and plain lifestyle
• Warren Buffett decided to make a commitment to give his
fortune to charity back in June 2006. Buffet's charity
donation is approximately $30 billion, which is the largest
donation in the history of the United States. The donation
was enough to more than double the size of the foundation
with 83% of it going to the Bill and Melinda Gates
Foundation.
•
• The following quotation from 1988 highlights Warren
Buffett's thoughts on his wealth and why he long planned to
re-allocate it:
• “I don't have a problem with guilt about money. The way I
see it is that my money represents an enormous number of
claim checks on society. It's like I have these little pieces of
paper that I can turn into consumption. If I wanted to, I could
hire 10,000 people to do nothing but paint my picture every
day for the rest of my life. And the GDP would go up. But the
utility of the product would be zilch, and I would be keeping
those 10,000 people from doing AIDS research, or teaching,
or nursing. I don't do that though. I don't use very many of
those claim checks. There's nothing material I want very
much. And I'm going to give virtually all of those claim
checks to charity when my wife and I die. (Lowe 1997:165–
166)”From a NY Times article: "I don't believe in dynastic
wealth", Warren Buffett said, calling those who grow up in
wealthy circumstances "members of the lucky sperm club".
[80] Buffett has written several times of his belief that, in a
market economy, the rich earn outsized rewards for their
talents:
• “A market economy creates some lopsided payoffs to
participants. The right endowment of vocal chords,
anatomical structure, physical strength, or mental
powers can produce enormous piles of claim checks
(stocks, bonds, and other forms of capital) on future
national output. Proper selection of ancestors similarly
can result in lifetime supplies of such tickets upon birth. If
zero real investment returns diverted a bit greater portion
of the national output from such stockholders to equally
worthy and hardworking citizens lacking jackpot-
producing talents, it would seem unlikely to pose such an
insult to an equitable world as to risk Divine Intervention.
[81
• In 2007, Buffett was listed among Time Magazine’s 100
Most Influential People in the World. (Wikipedia, 2007)
• Experience and research has shown little evidence that
an individual who comes to power is a “born leader.”
Warren Buffett took the falls that any other leader has to
take. Warren Buffett learned from his mistakes and
turned his mistakes into a positive thing. Warren Buffett
shares his leadership at all organizational levels and
Buffett is empowered to share leadership responsibilities.
Management Tenets
Buffett’s three management tenets concern the
evaluation of management quality
• Is management rational?
• Is management candid?
• Does management resist the institutional imperative?
Rationality
• If a company generates high returns on equity, the
duty of management is to reinvest those earnings
back into the company, for the benefit of
shareholders
• If the earnings cannot be reinvested at high rates,
management has three options:
ignore the problem and continue to reinvest at below-average rates
buy growth
return the money to the shareholders, who then might have a
chance to reinvest the money elsewhere at higher rates
• In Buffett’s mind, only one choice is rational, that is
option 3
Candor
• Buffett believes that a manager who
confesses mistakes publicly is more likely to
correct them
• Managers who discusses the failures of the
company with shareholders are admirable
Resisting the Institutional Imperative
• What is the institutional imperative?
• the lemming-like tendency of corporate management
to imitate the behavior of other managers, no matter
how irrational it may be
• Buffett points out that thinking independently and
charting a course based on rationality and logic are
more likely to maximize the profits of the company
than a strategy that can best be described as “follow
the leader”
Management Style
• He will not interfere with the running of the
company.
• He will be responsible for hiring and setting the
compensation of the top executive.
• Capital allocated to the business will have a price
tag (a hurdle rate) attached.
Buffet’s famous statements
• Rule No.1: Never lose money. Rule No.2: Never
forget rule No.1.”
• “The stock market is designed to transfer
money from the active to the patient.”
• “The most important quality for an investor is
temperament, not intellect.”
• "Risk comes from not knowing what you're
doing."
performance
Berkshire Hathaway’s
Class A shares vs. S&P 500
Berkshire Hathaway’s
Class A & B shares vs. S&P 500
Sources:
http://www.investopedia.com/university/greatest/warrenbuffett.asp
http://www.investopedia.com/articles/01/071801.asp
http://www.investopedia.com/articles/06/threewisemen.asp
http://en.wikipedia.org/wiki/Warren_Buffett
http://finance.yahoo.com/
