Living by Principle

At breakfast yesterday my granddaughter asked me to teach her about investments and how to handle money.  This is an excellent question for anyone, especially a new college graduate headed to medical school.

I thought of Warren Buffet, who is the most successful investor of the twentieth century.  How successful?  According to Wikipedia, in 2008 (at age seventy-eight), “Buffett became the richest person in the world, with a total net worth estimated at $62 billion.”

How did he do it?  The answer is simple.  Buffet has lived his business life following a series of his own principles.  Of course, this is far easier to declare than to accomplish, but in the case of Buffet the result of the “doing” speaks for itself.

One example of following his principles is that Buffet refuses to invest in an industry he does not understand.  This meant that in the 1990’s, when the price of tech stocks went through the clouds, he did not invest in those companies because he did not understand tech.  Many commentators wrote at the time that since he failed to participate in the “boom”, Buffet had become a “bust.”  After the tech stock price crash of the late 1990’s you might easily guess who is crying now.

Living by principles doesn’t just apply to money and the stock market.  It’s also important to have principles to live by.  For example:

1. Are you in charge of your life or are you a victim?  In other words, when life serves you lemons do you make lemonade, or do you complain about your situation?
2. In what areas do you think short-term, and in what areas do you think long term?  With regard to accumulating wealth, long-term works.  With respect to establishing deep, lasting relationships telling the truth works.
3. What are your principles about education?  I’m not only referring to formal education.  Do you want to learn more each day, or are you satisfied to live with what you already know?  My father is one-hundred years old, and shared with me this morning an idea he has about a new kind of collar for a man’s shirt.  My dad is always learning, always thinking.
4. Where are you on the scale of having compassion for others?  Compassion for yourself?
5. In what situations will you live by your principles, and in what situations will you compromise in order to do what is most expedient at the moment?  When you receive too much change at the grocery store will you keep it, or will you return it?
6. How much will you give your children?  Buffet says, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”

In thinking about living by principles, I am mindful of the story about the Buddhist monastery which was invaded by robbers.  Finding nothing of value, the leader of the robbers put his knife to the throat of the head monk and said, “Where is the gold?”

The monk merely smiled up at him.

Again, the robber demanded to know the location of the gold.  The monk continued to smile at him.  Finally the thief said, “Don’t you know that I have the power to kill you?”

The monk said, “Don’t you know that I have the power to let you kill me?”

I’m not sure I would go that far in living by my principles, although a man who did is Thomas à Becket, Archbishop of Canterbury, who was murdered on December 29, 1170.

Do you live by your principles?

Alan

(For more information from Warren Buffet, see The Essays of Warren Buffet:  Lessons for Corporate America, 2013, 3^rd edition, Selected, Arranged, and Introduced by Lawrence A. Cunningham.)