This was it. After a competitive selection process, weeks of preparation which included reading assignments, book discussion, and crafting questions which Warren Buffett had promised to answer, we were all assembled in a small auditorium in Kiewit Plaza in Omaha.
Several Wake Forest Charlotte working professional MBA students and graduate business students from the school’s main campus in Winston-Salem had been invited along with the best students from seven other schools – Iowa State, Massachusetts Institute of Technology (MIT), Northern Arizona, St. Louis University, University of Nebraska-Omaha, University of Southern California and Villanova. All were eagerly anticipating our interaction with the master of finance and investing, Warren Buffett.
Our day began with a visit to the Nebraska Furniture Mart, one of the earliest and most successful of Buffett’s acquisitions. Here were demonstrated the business rules Buffett looks for when choosing a company for acquisition – strong management, cost minimization, and a strategic growth plan.
Although Buffett does not become involved in managing his acquisitions, his influence was apparent in the business philosophy shared with us. It was also apparent in the large picture of Buffett over the Warren mattress, which we were jokingly encouraged to buy and feel just like him at night.
As we awaited Buffett’s arrival in the auditorium, we individually reviewed our accumulated knowledge of Buffett and his investing principles and wondered what we would hear today that would follow us back home and throughout our careers. As he strode confidently to the front of the auditorium, where there was a small table with an old Moody’s Manual and a stool on which he only briefly sat, we realized the privilege we had been afforded.
The question-and-answer session began with a discussion about Berkshire Hathaway’s acquisition of Precision Castparts Corp., which has activities in Charlotte and Monroe, and techniques for valuation of companies. When we asked about the health of U.S. manufacturing, he referred to the percentage of manufacturing companies in Berkshire Hathaway’s holdings and felt intellectual capital would assure a manufacturing role for the U.S. However, he did say unit labor costs were inhibitory.
He also emphasized the U.S. must invest in higher education and assure a means to finance that education to ensure a qualified labor force. He referred to innovative ideas in student loans, such as Purdue University’s plan to accept 10 percent of a graduate’s income for 12 years as full payment of their student loan obligation.
What does Buffett say leads to success? Focus and passion. He suggests that mastering both oral and written communication skills are vital. He talked about the importance of honor, integrity, and energy and used his performance as interim chairman at Salomon Brothers as an example of how honesty and integrity prevented a criminal indictment of that firm in 1991.
He advised professional investors to start young, build an audited record, do their work for the fun of it, and base fees on management instead of performance. He advised us to avoid “liquor, ladies, and leverage” as he had found this to be the cause of most ethical and legal problems friends and colleagues had faced over the years. He advised avoidance of risk but also pointed out that if you are following your passion you are already minimizing risk.
Throughout our discussion with Buffett there was a common theme of gratitude for his opportunities and experiences. He spoke of his parents and the influence his father had on his life, relaying he felt the greatest job one could have was being a teacher for your child. His decision to marry his first wife Susie provided stability and direction as she put him together and kept him together. His decision to work with Bill Gates in initiating and promoting the “Giving Pledge” was what he felt would be his greatest contribution to society. It was obvious from the time he was spending with us and his open and thoughtful answers to our questions that he would achieve the goal of his desired epitaph of “Teacher”.
As we prepared to join Buffett for lunch, he left us with some predictions about our world and economy, but none concerning individual stocks or market segments. He felt many of our greatest advancements would be in healthcare, and in particular in research concerning the brain. He warned the threat of chemical, biological, and nuclear attack was very real. He advocated for the refinement and adoption of renewable and sustainable energy and for government’s active role in that process. He spoke of the necessity of diversity in the workforce and utilization of all individuals’ talents and assets regardless of age, race, or gender.
Headed to lunch with Buffett, we all knew we had been given invaluable advice that pertained to each of us, regardless of the career path we chose. It reinforced the values and ethics demonstrated by our instructors and practiced by our fellow students at Wake Forest. It wasn’t enough to be successful financially, return on investment in the business world included a component of service and social commitment.
Charles Harr, a retired U.S. Navy rear admiral and practicing Charlotte surgeon, is an Evening MBA student at Wake Forest University’s Charlotte campus.