A sit down with Warren Buffett
Posted 7 March 2008 in Personal Finance Business Leave a Comment
If you did not know this by now, Warren Buffett is the world’s richest man alive, according to Forbes. At 77, he is the largest shareholder and CEO of Berkshire Hathaway, a holding company that owns the gecko at Geico, the fruits at Fruit of the Loom, and all the lactose at Dairy Queen. Buffett’s wealth came in the form of great investments into public companies such as American Express, Coca-Cola, and Gillette. He is admired by many, which is why 25 thousand investors make their way to Omaha, Nebraska to attend Berkshire Hathaway’s annual shareholder meeting.
A few lucky business students were invited to meet the man himself in a Q&A session (the entire Q&A session is linked below under related links). Below are some tidbits that I found interesting…
Why do you think that despite making your methods publicly available, that relatively few people have been able to emulate your success?People want to make money fast, but it doesn’t happen that way. Graham’s philosophy doesn’t promise enough for many people. You don’t know when it will happen, but you just wait for the fat pitches within your circle of competence. It’s not as exciting as guessing whether the stock price will go up the next day. Most investors in internet companies didn’t know the market cap. They were buying because they thought the stock would move, but if you asked them to write “I would buy XYZ company for $6 billion because”, they wouldn’t get halfway through the sentence. It’s the classic tortoise versus hare, bound to work over time. Charlie and I have educated competitors. Most don’t compete with us, though. It’s fine, we have more than enough money.
Given your business success, your immense fortune, and your celebrity status, how do you stay so down to earth and humble? Are there specific people or lessons you have learned throughout your life that enable you to maintain this outlook?I was lucky to have the right heroes. Tell me who your heroes are and I’ll tell you how you’ll turn out to be. One of your most important jobs in life will be raising your children. They will learn more from you than they will in graduate school. My father was a huge influence, and later on Graham came along. I was also never let down by my heroes.
What importance do you give to balance as it pertains to work and life and what do you do to maintain your appropriate balance?I have so much fun that it’s not work. In my own life I did virtually no social functions or meetings that I didn’t want to do. In my adult business life I have never had to make a choice of trading between professional and personal. I have simple pleasures. I play bridge online for 12 hours a week. Bill [Gates] and I play, he’s “chalengr” and I’m “tbone.”
There you have it: there is no such thing as quick money in the stock market, find the right heroes in life, and find a job that you enjoy so much that it does not become “work.”
Related Links: Notes from Buffett Meeting | About Warren Buffett | Berkshire Hathaway
Related Articles: Gates No Longer World’s Richest Man
Checking your bank or credit union's financial rating
Posted 29 February 2008 in Personal Finance Leave a Comment
If you do business with any financial institution, they will undoubtedly check your credit score. Why not do the same to them?
Not all banks are created equal. And although your money is insured for up to $100,000 through the FDIC (NCUA for credit unions), anything over that amount is at risk. Even if you do not have that much money in your bank account, knowing that your money is in good hands is a nice thing to know.
A quick search on any bank’s rating yielded Bankrate.com’s safe and sound service:
Bankrate.com’s Safe & Sound® service is a proprietary system designed to provide information on the relative financial strength and stability of U.S. commercial banks, savings institutions and credit unions. The system employs a series of twenty-two tests to measure the capital adequacy, asset quality, profitability, and liquidity (CAEL) of each rated financial institution.
There are two types of rating system that Bankrate displays. The first is CAEL, which is an analysis of financial data that is submitted to the government on a quarterly basis. The second is Bankrate’s star system, which is basically the CAEL number translated into stars. A CAEL rating of 1 will translate to 5 stars, or superior rating. A CAEL rating of 2 will translate to 4 stars, or sound rating, and so forth.
Hawaii top financial institutions, 3rd Quarter 2007.
I did a comparison between Hawaii’s largest banks and credit unions and found that both have similar safe and sound ratings with the exception of one bank.
First Hawaiian Bank is rated 4 stars, which means that it has a “sound” financial rating. For quarter ending September 2007, FHB’s ROI was 1.68%, compared to the bank industry’s average of 1.0% return. This is good because First Hawaiian Bank is making sound investment decisions and its return is above the industry’s par. On the other hand, American Savings Bank is the only bank that rated below its peer group, with a “performing” rating as a result of measly 0.70% return on investment (at least it was not negative).
HawaiiUSA Federal Credit Union is rated 4 stars, which also means they have a “sound” financial rating. For quarter ending September 2007, HawaiiUSA’s return on investment was slightly less than FHB’s at 1.27%, which is still above par to the credit union industry’s 0.8% return.
I chose to compare banks with credit union only to show that banks are not necessarily better than credit unions. In fact, in terms of services provided, credit unions provide the same type of service as banks but for less. So the next time you are on a hunt for a financial institution, be sure to check out their financial rating to be sure that your money is safe and sound.
Related Links: Bankrate.com Safe & Sound | FDIC: Failed Bank List
Guy Kawasaki: Apple Fellow, Venture Capitalist, from Kalihi, Hawaii
Posted 22 February 2008 in Life Leave a Comment
If I could walk the path of someone’s life and trace where they have been to where they are now, I would be very interested in walking in the path of Guy Kawasaki’s life.
I find his story to be very interesting because his great success in life probably started in the same neighborhood where I am currently living. He was born and raised in Honolulu, Hawaii where he lived in a “tough” neighborhood of Kalihi Valley. His family was not rich or poor either, having hard working parents that allowed him to attend a prestigious (and expensive) private school called Iolani. He attended Stanford University where he majored in psychology, the easiest major that he could find, received an MBA at UCLA as well as an honorary doctorate from Babson College.
The captivating part of his life story began when he was offered a job at Apple Computers where he evangelized the Macintosh computing platform to hardware and software developers. Although his job at Apple ended in 1987, he returned in 1995 to rejuvenate the Macintosh cult as the Chief Evangelist. He is noted as one of the individuals that made the Macintosh platform the success that it is today, and was given the title of Apple Fellow, an award that is given to any Apple employee that has made extraordinary leadership contribution to personal computing while at the company.
Guy is currently a managing director at Garage, a venture capitalist firm that he co-founded shortly after his second departure from Apple. He has written eight books, most notably “The Art of the Start,” a guide focusing on entrepreneurship and raising capital.
Born and raised as a Kalihi boy to becoming an Apple Fellow and now a venture capitalist. Guy Kawasaki has definitely shown that great things can happen even if you are from Kalihi.
Related Links: Guy Kawasaki | Art of the Start book | Kalihi
