Tags: Gates | Buffett | stock | learning

Bill Gates: 3 Things I've Learned from Warren Buffett

Friday, 14 Jun 2013 12:31 PM

By Michael Kling

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Bill Gates, in his first post on LinkedIn, says he's learned three important things from Warren Buffett.

Of course, most people probably want to learn more about investing from Buffett, the chairman and CEO of Berkshire Hathaway, one of the world's richest men and widely seen and the most successful investor.

That's understandable, notes the Microsoft founder turned philanthropist. Unfortunately, that's also where most people stop. They lose out on learning about Buffett's larger thinking about business.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

Gates admits that before he first met Buffett, he picked stocks by just using financial numbers like stock prices and volumes. But Buffett asked deeper, more fundamental questions about Microsoft's business, Gates writes.

"That's when I realized he thought about business in a much more profound way than I’d given him credit for."

Buffett's framework encompasses a larger picture than stock prices. He looks at the company's moat, or competitive advantage, and if the moat is growing or shrinking. He advises shareholders to act as if they own the entire business and to ignore the market to take advantage of the market's mistakes to find underpriced companies.

How to "use your platform" is something else Gates says he's learned from Buffett.

His letters to his shareholders are justly famous — partly because of his humor, partly because they help people learn to invest better. But he also speaks honestly, criticizing things like derivatives and stock options, and taking stands on issues like raising taxes on the wealthy even though they run counter to his own interests.

Gates says Buffett has inspired him to write his own annual letter about his foundation's work.

"I still have a ways to go before mine is as good as Warren’s, but it’s been helpful to sit down once a year and explain the results we’re seeing, both good and bad."

Gates has also learned from Buffett the importance of knowing how valuable your time is.

"No matter how much money you have, you can't buy more time. There are only 24 hours in everyone's day," he says.

Understanding this, Buffett doesn't fill his time with useless meetings, yet is generously shares his time with people he trusts, Gates notes. His close advisors can call him and he'll answer.

In this year's letter, Buffett noted that America has always faced uncertainties. "It's just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful)."

He also wrote, "I believe it's a terrible mistake to try to dance in and out of [the stock market] based upon the turn of tarot cards, the predictions of "experts," or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it."

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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