Transcription
Um, there's a date on my calendar that I've had circled for some time now. It's not the annual meeting. It's not a birthday. Uh, but it's a deadline, and that deadline is coming up faster than you think. I'm going to tell you the exact date in a moment.
Before I do, I want you to do something for me right now in the comments. I want you to tell me where you're watching from. Are you in your living room in Omaha? A coffee shop in London? Maybe you're on a tractor in the middle of a field somewhere in Iowa. Um, let me know. Uh, it's important for me to know my partners are with me on this. Um, because what I'm about to share is something I've been thinking about a great deal, especially as I've gotten older. It's something that Charlie Munger and I talked about, uh, not in specifics, but in principle for many, many years. It's a, it's a plan, a course of action, and it is designed specifically for those of you who have crossed the 60-year mark.
Now, why 60? It's an interesting number, isn't it? It's, it's the point where the game changes. Uh, it's the point where you stop planting new orchards and you start focusing on, uh, harvesting the fruit and, and protecting the trees you already have. It's the point where time, uh, well, time starts to compound against you instead of for you, if you're not careful. Uh, there is an event coming, a significant, unavoidable event that will test everything you've built. And this isn't some market prediction. Uh, I've told you a thousand times, uh, I don't make market predictions, and you shouldn't listen to anyone who does. And, and this is different. This is about preparedness for a certainty. So stick with me. I'm going to lay out a few simple, um, crucial steps. Uh, not a hundred. You don't need a hundred. You just need a few that truly matter. And by the end of our time together today, I promise you, uh, you will, uh, will understand, uh, exactly what this event is, and you will have a clear plan for, for what you need to do.
First, let's talk about the most important rule of all, especially now. One, you must stop playing for wins and start playing not to lose. Now, I know that might sound defensive. It might sound, uh, boring, but let me tell you, there's nothing more exciting than going to bed at night knowing that the money you've spent a lifetime accumulating is safe.
I learned this lesson the hard way. You know, um, I was just a kid, 11 years old. It, it was March of 1942. I took every penny I had saved, $114.75, and I bought three shares of a company called City Service Preferred. I'd been charting it, watching it. I was a real hot shot, you know. I thought I knew everything. I bought it at $38 a share, and almost immediately it went down to $27. I want you to think about that. I was 11 years old, and a third of my worldly net worth had just, um, vanished. I, I felt it right here in my stomach. Every morning I'd run to get the paper, and, and my heart would sink a little more. My sister Doris, who had gone in with me, uh, would look at me every day as if to say, "What have you done to us, Warren?"
Now, the, uh, the story has a happy ending, sort of. Uh, it went back up to $40. And, and I sold. I made a tiny profit. Uh, I couldn't get out of it fast enough. I was so relieved to just be whole again. And then, not long after, it went to over $200 a share. And I learned two things from, from, uh, Anthony than the first is, is obvious. Don't get shaken out by the market's gyrations. But the second, the more profound lesson, the one that has stuck with me for over 80 years, is the pain of losing money is so much more intense and so much more destructive than the pleasure of making it. Uh, when you're 20 or 30 or even 50, you have a, a long runway. You can make a mistake like that, lose a third of your capital, and you have decades of earning power to make it back. But when you're 60, uh, 70 or 80, uh, that runway is shorter. Your primary asset is no longer your, your future earning power. It's the capital you've already built. And that is why my first rule of investing, never lose money, and the second rule, never forget rule number one, uh, becomes the gospel at this stage of your life.
The game is no longer about hitting home runs. The game is about not striking out. Uh, think of yourself as a farmer. For 40 years, uh, you've worked the land. Uh, you've saved, you've invested, you've paid off the mortgage. Now you own that 500-acre farm free and clear. It produces a good, steady crop year after year. Now, somebody comes to you with a proposition. Um, they say, "Let's take the deed to your farm, um, and let's bet it all on a new, um, experimental crop." The scientists say it could produce 10 times the yield of corn, or it might be wiped out by the first frost. What do you do? You thank them for their time and you show them the door. You don't bet the farm. You've already won the game. Uh, your job now is to protect the farm. Uh, so, uh, how do you do that? You stop looking for the next high-flying tech stock that promises to change the world. You stop listening to your brother-in-law who has a hot tip on some cryptocurrency he can't even explain. You stop thinking about what might go up 1,000% and start obsessing over what is almost certain not to go down 50%. You, uh, you look for businesses with what I call a, a durable competitive advantage. Uh, a company like Coca-Cola. For over a hundred years, uh, people have been trying to knock Coke off its throne, and they can't. It's because there's a little castle there, and surrounding that castle is, is, uh, a moat. Uh, and, uh, that moat has sharks in it. Uh, and that is a wonderful business. You don't need to find a hundred of them. You need a handful of wonderful businesses that you can understand, run by able and honest people. Um, and you need to buy them at a sensible price, and then you sit. You let them do the work for you. You protect your principal. Let the dividends and the steady compounding earnings be your crop. Because when this, uh, event I'm talking about arrives, this deadline on the calendar, the single most important thing will be that your financial fortress is intact. That you haven't gambled away, uh, your security chasing one last big score. You have to play not to lose. It's that simple.
Two, you must aggressively simplify everything. I want to tell you a little story about my friend Charlie Munger. Now, Charlie was probably the smartest man I ever knew. His mind was like a steel trap, but it was also like a library filled with the, the wisdom of the ages. And one of the things Charlie and I always agreed on was the importance of avoiding complexity. Charlie used to say, "All I want to know is where I'm going to die, so I'll never go there." Um, it's a joke, of course, but, uh, the underlying principle is profound. It's about inversion. It's about, uh, avoiding the things that cause trouble. And one of the biggest causes of trouble in both life and finance is unnecessary complexity.
When you get to be over 60, uh, your life has a tendency to, uh, accumulate, uh, stuff, not just, uh, physical stuff, though there's plenty of that. Uh, I'm talking about financial stuff. You've got that, uh, 401k from the job you left 15 years ago. You've got a, a handful, uh, of, uh, stocks you bought, uh, on a tip that you can't even remember. You have three different insurance policies you don't fully understand. Um, you, you have a brokerage account here, another one there. It's a mess. Your financial life looks like a cluttered garage. You know, there are some valuable tools, uh, in there somewhere, but you can't find them because they're, uh, buried under a pile of old newspapers, broken lawn chairs, and half-empty cans of paint. It's time for a cleanout. Why? Because complexity is the enemy of understanding. And if you don't understand what you own, you are setting yourself up for a fall.
When I buy a business, I have to be able to explain it in simple terms. We own a candy company, See's Candies. What do they do? They make delicious candy and they sell it for more than it costs them to make. People have been happy buying it for 100 years. That's a simple business. I understand it. Um, we own a big railroad, the BNSF. What does it do? It moves goods from point A to point B across the country. Um, it's essential to the American economy. It's a simple business. I understand it. Now, if someone comes to me with a 300-page prospectus on a collateralized, uh, debt obligation squared, full of Greek letters and, and complex formulas, and my eyes glaze over. It's not because I'm not smart enough to figure it out. It's because I've learned that any business that requires a PhD in mathematics to understand is probably not a very good business. It's a business that's designed to confuse, not to clarify.
Your job starting today is to become the curator of your own financial museum. Uh, and you only get to keep the masterpieces. Everything else has to go. Go through every single investment you own. Uh, pick each one up and, uh, ask yourself a simple question. The one I ask all the time: Can I explain this business and why it will be more valuable in 10 years, uh, to a reasonably intelligent person in 5 minutes or less? If the answer is no, sell it. I don't care if it's been a good performer. I don't care if your financial advisor loves it. If you cannot understand it, you have no business owning it. Uh, you are speculating, not investing. Consolidate your accounts. Get it all under one or two roofs. Make a simple, uh, one-page document that lists everything you own and where it is. Your spouse should be able to look at that, that piece of paper and understand your entire financial situation. No hunting, no mystery. This isn't just about making your life easier. This is about risk management. In a crisis, a health crisis, a market crisis, uh, any kind of crisis, complexity will paralyze you. Simplicity will empower you. When you have a clear, simple, understandable portfolio of high-quality assets, uh, you can think clearly. You can act rationally. You can sleep at night.
I live in the same house I bought in 1958. I drive myself to work. My office has, uh, 25 people. I don't have a stock ticker on my desk. My greatest luxury is a private plane because it saves me time, and time is the one thing I can't buy more of. Um, but my life is simple. I, I do that by choice because it allows me to focus on the two or three things that, that really matter. Uh, for you, um, simplifying your financial life, uh, is how you prepare for that deadline on the calendar. It's how you make sure that when the time comes, uh, you are not wrestling with a hundred tangled threads, but holding a few strong, uh, simple cords that will see you through.
Three, you must master the art of wealth and wisdom transfer. Now, this is a topic people don't like to talk about. It feels morbid, but it's one of the most important jobs you have in this chapter of your life. For decades, you've been the chief accumulation officer of your family. Um, now you have to become the chief distribution and education officer, and the two are very different roles. Um, look, uh, I've pledged to give away more than 99% of my wealth. My children are not going to inherit vast fortunes. They're going to inherit enough money so that they can do anything, but not so much that they can do nothing. And this was a decision Susie and I made a long, long time ago. Why? Because we saw what happens when wealth is transferred without wisdom. It can be a destructive force. It can rob people of ambition, of purpose, of the satisfaction that comes from building something of their own. Your legacy is not just the assets you leave behind. It is the values you instill in the people you leave behind. Um, and that process has to be deliberate.
First, the practical side. You need a will. A simple, clear, up-to-date will. It's astonishing to me how many successful people I've known who have built incredible businesses, managed enormous complexity, and yet they fail at this one simple task. Um, they leave behind a mess for their families to clean up, a mess that often creates conflict and resentment for years. Don't do that. Uh, sit down with a good lawyer and get it done. It's an act of love. But, uh, that's just the paperwork. Uh, the real work is communication. Uh, you need to be having conversations with your spouse and with your children about money. Not just about the numbers, but about the meaning of money. What is it for? What are our family's values, uh, when it comes to saving, spending, and giving?
I've been writing a letter to my shareholders every year for over 50 years. When I write it, I, uh, I pretend I'm talking to my sisters, uh, Doris and Birdie. Uh, they're smart, they're interested, uh, but they're, they're not in the business day-to-day. I try to explain what we're doing in plain English, with, with honesty and candor. I tell them about our successes, but just as importantly, I tell them about my mistakes. And you need to write your own annual letter to your family, not with, uh, uh, numbers and charts, but with stories and principles. Talk to them about your own journey, the struggles, the lucky breaks, the lessons learned. Tell them the story of how that first dollar was earned and, and saved. Let them understand that the wealth you've built is not just a number on a statement. It's the physical manifestation of a lifetime of work, discipline, and maybe a little bit of luck.
If you, if you have a business you, you plan to pass on, um, you, you need to be even more intentional. Who has the passion and the skill to run it? It may not be your oldest child. It may not be a child at all. And the worst thing you can do is hand over the keys to someone who sees it as an obligation rather than an opportunity. The goal is to transfer not just the assets, but the mindset of a steward. A steward is, is someone who understands they are the, uh, temporary caretaker of something precious, with a responsibility to preserve and grow it, uh, for the next generation.
My own children are carving their own paths. My son Howard is a farmer and a philanthropist. My daughter Susie, uh, is a philanthropist focused on early childhood education. My son Peter is a musician and a philanthropist. Uh, they are using their talents in ways that give them purpose. And, uh, that to me is the ultimate return on investment. That event on the calendar, that deadline, is a moment of transfer. If you have prepared your family, not just financially, but emotionally and intellectually, it will be a smooth and peaceful transition. It will be a continuation of your legacy, not an end to it. If you haven't, it could be a tragedy. So, start the conversation. Start it tonight.
Four, you must treat your health as your most important non-compounding asset. Now, you all know me. I'm not exactly, uh, a poster boy for, uh, modern nutrition. Um, my idea of a balanced meal is a hamburger in one hand and a hot dog in the other. I told a reporter once that if I was told I could live one year longer by eating broccoli and Brussels sprouts, I'd take the year off. Uh, it would seem longer anyway. So I'm not going to stand here and lecture you about, uh, diet and exercise. But I am going to tell you something that is dead serious. Um, when I talk to students, I often give them this analogy. I say, "Uh, imagine I offer to give you any car you want. A brand new Ferrari, a vintage Porsche, uh, whatever you dream of. It's yours, but there's one catch. It is the only car you will ever get in your entire life." Now, what, what would you do? Uh, you'd read the owner's manual cover to cover. Um, you'd change the oil twice as often as recommended. You'd garage it. You'd protect it from the slightest scratch. Uh, you'd treat it like a temple because you know it, it has to, to last you a lifetime. Well, you are in exactly that position. Um, you get one mind and one body. That's it. And you can't start taking care of it when you're 60. Um, by then, uh, the rust has already started to set in. All the money in the world cannot buy you more time, uh, and it cannot buy you a new body. I've seen some of the richest people in the world who would trade every penny they have, uh, for a clean bill of health, and they can't make that trade. Your, your health is your most precious asset. It's the one asset that allows you to enjoy all the others. What good is a mountain of stock certificates if you don't have the energy to get out of bed in the morning? What good is the ability to travel anywhere in the world if you're not well enough to make the trip? Uh, at this stage, you are the CEO of your own well-being, and you have to manage it with the same seriousness and discipline that you manage your business or your career. Uh, that means listening to your, your doctors. It means taking the checkup seriously. Uh, it means addressing the small problems before they become big ones.
Charlie lived to be 99. He wasn't an athlete. Um, but he had an incredible mind, and he kept it sharp until the very end. He read constantly. He was curious. He was engaged. He never let his mind go. That's a critical part of it. Your physical health and your mental health are intertwined. You have to nurture both. Uh, the financial capital you've built can help. Uh, it can provide you with the best medical care, the resources to live a comfortable and stress-free life. Um, but it cannot do the work for you. You have to be the one to make the smart decisions, to maybe walk a little more, to, uh, connect with friends, to keep learning, to, to find purpose in your days. Uh, that deadline on the calendar I mentioned, it has everything to do with health. It is the ultimate health event, if you will. The years leading up to it are your opportunity to maximize the quality of the life you have left. Don't squander it. You wouldn't, uh, neglect your most valuable, uh, stockholding. Don't neglect your most valuable asset of all, yourself. Invest in your health with the same diligence you invested in Berkshire Hathaway. The returns are infinitely better.
Five, you must remain, uh, a learning machine. I spend about five or six hours a day reading still. People ask me, "Warren, you're in your 90s. You've been, you've been doing this for over 80 years. What could you possibly still be learning?" And my answer is, I'm learning what I don't know. Uh, the world is a fantastically interesting and, and ever-changing place. The minute you think you've got it all figured out is the minute you're in deep trouble. A mind, just like a business, either grows or it shrinks. It never stands still.
One of the great joys of, uh, my life was my partnership with Charlie for over 60 years. We talked almost every day. And it wasn't just idle chatter. We were constantly testing ideas, uh, challenging each other's assumptions. He was a master at destroying my dumber ideas. And, uh, I'd like to think I occasionally return the favor. Um, that continuous process of learning, of debating, of, uh, refining our thinking is what, uh, kept our minds, uh, sharp. It's what allowed us to adapt to a changing world. Uh, when you retire from your primary career, there is a great danger. The danger is that you stop learning, you stop being challenged, you fall into a routine, and, uh, your world starts to get smaller and smaller. This is a bigger threat to your long-term well-being than a bare market. You must fight it with everything you have. You have to, to structure your life to force yourself to keep learning.
How do you do that? Read. Read voraciously. Read things outside of your comfort zone. Read history. Read biographies. Read science. Read things you disagree with. Reading allows you to have a conversation with the greatest minds that have ever lived. It is the most efficient way to acquire a multi-generational store of wisdom. Stay curious. Ask questions. Uh, talk to young people. Find out what they're excited about, what they're worried about. They see the world through a different lens. And, uh, you can learn an enormous amount from that. Don't be the person who starts every sentence with, "Well, well, back in my day." And, you know, your day is today. Find a new hobby or a subject to master. Maybe it's a language, maybe it's gardening, um, maybe it's learning to play bridge online. I'll tell you, it's one of the best exercises for the mind there is. Uh, it's a game of logic, probability, and psychology. Uh, Bill Gates and I play, and it keeps you on your toes. The point is, you need to have a project. You need to have something that, uh, gets you out of bed in the morning with a sense of purpose, with the desire to figure something out.
Why is this so critical, especially after 60? Because the world is not going to stop changing. The technologies, the politics, the economic landscape, it's all in a constant state of flux. To navigate the years ahead successfully, you have to remain adaptable. And you cannot be adaptable if you are not learning. Think about investing. The principles of, uh, value investing that Ben Graham taught me in the 1950s are timeless. Buy a wonderful business, uh, at a fair price. Uh, but the application of those principles has to adapt. Uh, the businesses that are wonderful today are not the same ones that were wonderful 50 years ago. If I had stopped learning in 1965 and only stuck to, uh, textile mills, uh, Berkshire Hathaway would be a footnote in a history book. Uh, that deadline I keep talking about. It is the final exam, and the test is on everything you've learned in your entire life. The more you've learned, the more, the more wisdom you've accumulated, the better you will be able to handle it with grace, with clarity, and with peace. Don't stop learning. It's the single best investment in your future you can possibly make.
Conclusion: The deadline. All right, you've been very patient. You've listened to me talk about, uh, protecting your capital, about simplifying your life, about preparing your family, about investing in your health, and about never, ever stopping the process of learning. And I told you there was a date circled on my calendar, a deadline. Uh, that date is July 9th. What happens on July 9th? Absolutely nothing. You see, the date is a fiction. It's a placeholder. I picked it out of thin air. But the deadline, the deadline is real. The event I've been asking you to prepare for is the one event that is a 100% certainty for every single person in this room, and yet it's the one, uh, we are the least prepared for. The deadline is the end of your life. Uh, the reason I gave you an arbitrary date is because that's exactly what you have. You have an arbitrary, unknown deadline. It could be tomorrow, or it could be 30 years from now. You don't know. And because you don't know, uh, uh, the urgency to prepare is not next year, not next month. It is right now. Uh, today.
Everything I've talked about is the work of preparing for that final, inevitable event. Um, playing not to lose is about ensuring you have financial security to the very end, that you don't outlive your money and spend your final years in a state of fear and dependency. Simplifying your life is about having the mental clarity and peace of mind to face whatever comes without being burdened by, um, chaos and confusion. Transferring your wisdom and your wealth is about ensuring your legacy is one of love and empowerment, not one of conflict and turmoil for those you leave behind. Investing in your health is about maximizing the quality of every single day you have left on this earth. And continuing to learn is about keeping your mind alive and engaged, making you a participant in the world right up until the last moment, not just a spectator.
This isn't about being morbid. This is the opposite of morbid. This is about empowerment. This is about taking control of the final chapter of your life and writing a masterpiece. You, you've worked your entire lives to get to this point. You've navigated recessions, raised families, built businesses. You are the, the beneficiaries of the greatest tailwind in human history, the American economy. You've won. Now, all you have to do is take these simple, logical steps to ensure you and your family can enjoy that victory for the rest of your lives, however long that may be. Don't wait. The clock is ticking. You just can't see the hands. Thank you for your time. It's the most valuable thing any of us have.