Why Warren Buffett and Sam Walton Got Rich, and You Won't

Source: Wal-Mart

Most highly successful businessmen and women are oddly apathetic about money. It is, at most, nothing more than a quantitative measure of achievement.

And to some, it isn't even that. "Money has never meant much to me," Sam Walton, the found of Wal-Mart, wrote in his autobiography, "not even in the sense of keeping score."

The same quality can be found among many of history's greatest investors. Warren Buffett provides a case in point, driving a modest car and living in the same house he bought decades ago for less than $40,000.

Wealth to people like Walton and Buffett is a byproduct of seeking success, and not the other way around.

Is this a coincidence? Does it tell us nothing more than the fact that these two men, and countless others, just happen to be indifferent to money while at the same time having an overabundance of it?

Or is there something deeper to this? More specifically, could there be a causal relationship between the two? Does being apathetic toward money actually help one amass it?

The (obvious?) answer to this is "yes," but it's probably not for the reason you're thinking.

Over the past few decades, we've learned a lot about human behavior and how it impedes our ability to make wise investment decisions. Greed influences us to buy stocks when they're high. Fear then causes us to sell when stocks are low.

The net result is that most investors (including hedge funds, for that matter) underperform the S&P 500 (SNPINDEX: ^GSPC  ) by a wide margin.

"I won't do that again," we tell ourselves. But then the next bull market begins, and what happens? "This time is different," we conclude. And it's the same story all over again.

"We do it because we make investing decisions based on how we feel rather than what we know," says Carl Richards in The Behavior Gap. "Falling stocks scare us; rising stocks attract us."

How can you break this cycle? Or, better yet, how can you reverse it so that, as Buffett puts it, you're fearful when others are greedy and greedy when others are fearful?

The answer lies in objectifying money; making it an abstraction; becoming, if you're able to, apathetic toward it. It's only by doing so that you can loosen emotion's grip on your financial decisions.

Of course, herein lies the problem. Not caring about money -- beyond a comfortable subsistence -- is so much easier said than done.

"When most people say they want to be a millionaire, what they really mean is 'I want to spend a million dollars,' which is literally the opposite of being a millionaire," says my colleague Morgan Housel.

The point being, if you want to be rich, you need to stop caring about the trappings of wealth.

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  • Report this Comment On November 18, 2013, at 3:05 PM, inreality01 wrote:

    I understand and agree with some points made in this article but............at some level they care about money.

    Buffet tries to avoid as much taxation as he can and he is the biggest pusher of the estate tax (ie, death tax) because it forces many small, often family owned, businesses to have to sell off assets when someone dies and then his business come in, scoop up the business or business assets and turn it into a profit for themselves. Buffet doesn't do this to be successful at destroying family businesses and the dreams of individuals..... does he? If he does, then he is more of an awful person than he would be if he did this merely for the sake of lining his pockets at the expense of others. Either way, it's not a nice thing to do.

    I wonder if he would do this if there was no profit motive...........

  • Report this Comment On November 18, 2013, at 6:36 PM, todamo13 wrote:

    It would be nice if these rich guys (who don't think much about money) would be less tight-fisted about paying their workers decent living wages and benefits.

    Considering how many Wal-Mart, McDonalds, etc workers have to get public taxpayer assistance just to survive because their wages are so low, while the Waltons, for instance, are ridiculously, unimaginably wealthy... you really have to wonder about the impact on our society.

    Guess that's another reason I won't get rich like Buffett or Walton- I wouldn't bleed people dry just to hoard a tremendous mass of money that I "don't care about."

  • Report this Comment On November 19, 2013, at 2:02 AM, 2motley4words wrote:

    @inreality01: With regard to Berkshire Hathaway at least (I can't speak about his behavior re his personal finances), Buffett "tries to avoid as much taxation as he can" because he's so invested in the company---not just in terms of assets but also in the sense of doing what's economically best for all shareholders. Also, in light of Berkshire's multi-billion-dollar heft, most family businesses are much too small to warrant Warren's interest/time; so, unless you can provide examples or other justification for your claim that Buffett's support of the estate tax is based on his desire to "scoop up" family businesses on the cheap, I'll continue to take him at his word when he opines that excessive inherited is contradictory to the American Way of making one's own way.

    @todamo13:For different reasons, I'm uncertain whether "these rich guys" include either Sam Walton or Warren Buffett. Although I agree that the current Walton clan seems to be "tight-fisted about paying their workers decent living wages and benefits," I don't know whether that was also true about founder Sam; if you have some documentation that he was just as exploitative as his descendants, please cite such sources. As for Buffett, please provide evidence that Berkshire's employees do not receive "decent living wages and benefits" and/or that they're otherwise exploited.

  • Report this Comment On November 19, 2013, at 2:07 AM, 2motley4words wrote:

    My bad---In the last sentence of my first paragraph above, I'd intended for the word "wealth" to be between "inherited" and "is."

  • Report this Comment On November 19, 2013, at 8:33 AM, MiltFreedman wrote:

    todamo's comments just make Zero sense, economically. An individual has the freedom, in America, still to Choose where they work. If they choose to work for Wal-Mart, it's because they view it as a way to 'make a go of it'. To say that Sam Walton was going to 'bleed people' dry is just a ridiculous leftist talking point, without any basis in fact, whatsoever. In fact, it's akin to the braindead politicians issuing edicts, like Obamacare, that all Americans 'Must' buy high-priced health insurance. Leftist always know better what to do with 'Other people's' money

  • Report this Comment On November 22, 2013, at 3:52 PM, CyranoRox wrote:

    Miltie, each of your sentences is an opinion, or rather an expression of desire masquerading as purported fact. You would like it to be so that Leftists always know better, or feel that we do; actually, everyone who makes any economic statement is saying that he knows better what to do with money, including other people's money.

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