Warren Buffett: 3 Lessons From His Younger Years

The Yangtze never runs backwards; man recaptures not his youth.

Chinese Proverb

Warren Buffett was born into the Great Depression. 

After the Wall Street Crash in 1929, Warren's father was to scared to call investors with bad news. He spent his afternoons at home, possibly hiding from them. And Warren was conceived during that time. If he had been out making his regular calls, writes Ayano Morio, there is no telling what would have happened... The guess is that there might have been no Warren Buffett!

I chose to read the translated version of Ayano Morio's comic book Warren Buffet: An Illustrated Biography of the World's Most Successful Investor as my first finance book of 2020. Here are 3 lessons from the book's portrayal of young Warren:

1. Young Warren was a big saver

In 1951 and at the age of just 22, the Columbia University business student bought $10, 000 GEICO stock. A year later, he sold for $15, 000— at a profit of 50%. When he bought that stock, he had used only 2/3rd of his savings! And much of this savings had come from his earnings by delivering newspapers and magazines.

By early 1956, when Benjamin Graham retired, Warren had $140, 000. He had only worked at Graham-Newman as an analyst for 2 years.

Many years later, Buffett still lived in an ordinary middle class home, in a sharp contrast to his status as one of the richest men on the planet. No doubt, this modesty complemented his attitude to savings.

2. Warren chose the right relationships

Benjamin Graham (who wrote The Intelligent Investor) taught stock analysis part time when Buffett enrolled at Columbia Business School. He was a student in Professor Graham's class. 

Warren would then read Graham's book (The Intelligent Investor) and study the insurance company GEICO (where Graham was Chairman) on the road to also become the Professor's mentee— more than just his student.

At age 24, Buffet entered Graham's company as Analyst and had the opportunity to learn more about Graham's stringent rules for stock picking and from the man himself.

A few years later, when he had left Newman-Graham, an investor invites Warren to lunch and introduced him to Charlie Munger. Charlie studied Law.

Warren and Charlie hit it off immediately and soon they were talking on the phone everyday about ideas.

He also had a great relationship with Katharine Graham (not related to Benjamin Graham in this context) with whom he attended many VIP dinners, mixing with Washington's rich and powerful. 

Warren chose the right relationships and he did hold his true friends with both his hands.

3. He could handle rejection

As graduation approached at Columbia University Business School, Warren met his teacher about the possibility of a job at Graham's firm. As his top student, Warren had been certain he'd get a job, even offering to work for free to get good experience.

Graham would not give him a positive answer, informing young Warren that there were no openings at Newman-Graham. 

The shock hit him hard but Warren never took it personal, at least not for long. Warren would proceed to enter employment at Buffet Falk & Co. (his father's small stockbroking firm). He also got married to Susan and bought $10, 000 of GEICO stock.

After 2 years, he received a call from Benjamin Graham: there was now an opening at Graham-Newman

A long time later, Warren discovered that the reason for the rejection was Graham-Newman's policy of positive discrimination against Jews. While Warren had the chance to work for a lot of Wall Street firms, many young Jews had few opportunities to work.

In addition to these three lessons that I have picked from Ayano's book, young Warren was also a curious reader, a deliberate learner and he loved numbers.

He was also honest and smart. When one of his customers cancelled their subscription on the newspaper he delivered, he thought they were switching to another and asked them about it. He was right! And with that knowledge, he started delivering the newspaper his customer switched to.

When Warren reached the age where one thinks about their past, one might say that he would have nothing or too little to remember in regrets.