Warren Buffett Reveals How You Can Manage Your Money Better Than He Has

Warren Buffett has taught us a lot through the years, but there is one simple way we can handle our money better than he has.

Jun 1, 2014 at 1:28PM


Want to manage your money better than billionaire Warren Buffett has? It's easier than you think. Just do this one simple thing.

Massive mistakes
It's tough to believe the man on top of the $315 billion Berkshire Hathaway, who himself is worth more than $65 billion, has ever made a single mistake when it comes to managing money. After all, since he took over in 1965, Berkshire Hathaway has grown by a staggering 693,518%, from $19 a share to $134,973.

But Buffett, like us, is human, and he has made mistakes, which he admits have cost him billions.

At the end of 2008, Berkshire Hathaway had a $7 billion position in ConocoPhillips (NYSE:COP). Yet Buffett suggests he "made a major mistake of commission," as he "bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak."

Buffett didn't think energy prices would plummet as they did, and as a result, while his position in ConocoPhillips cost $7 billion, it was worth just $4.3 billion. Buffett admitted, "the terrible timing of my purchase has cost Berkshire several billion dollars."

Just this year, Buffett noted he'd lost $873 million in the purchase of $2 billion worth of bonds from Energy Future Holdings, which bought the assets of electric firms in Texas in 2007.

In those two instances, there is one common thing that led to Buffett losing billions, and when we manage our money with it in mind, we'll be in a much better place.

Is it never to invest? Absolutely not. Is it to avoid energy stocks? That isn't it either.

It's that whenever a decision about money is being made, never do it alone.

The simple solution
In 2008, when discussing the ConocoPhillips fiasco, Buffett said he made the investment:

...without urging from Charlie or anyone else.

And in 2013, he said he first bought the debt of Energy Future Holdings:

...without consulting with Charlie. That was a big mistake.

Implicitly in 2008 and explicitly in 2013, Buffett admits the biggest problem wasn't the companies themselves or the industries they found themselves in, but instead that he flew solo when making the investment.

Buffett didn't ask Charlie Munger, the long-standing second-in-command at Berkshire and Buffett's trusted business partner, what he thought about the investments. Instead, Buffett made them alone.

Through this, we can learn whenever any decision surrounding an investment is made, whether it be making an investment in a company, buying a home, or anything of that sort, the best course of action is to enlist the help of someone else, and never make it on your own.


Warren Buffett at the 2013 Shareholder Meeting.

Does that mean you need a financial advisor? That's a real grey area, and there's not a yes or no answer, but it's important to remember they can be incredibly costly, too. Does it mean you should blindly follow "hot" stock market trends?

Considering Buffett says to "be fearful when others are greedy, and be greedy when others are fearful," the answer to that is easier: Of course not.

What Buffett wants us to see is an investment decision should always be made after consulting others -- whether they're friends, co-workers, family, advisors, or others -- who are trusted. While the combined decision may not always be correct -- Buffett and Munger have made mistakes together -- any decision made in isolation has a greater chance of failing.

We can learn a lot from the right things Buffett has done, but learning from wrong things, too, will allow us all to manage our money a little better.

Warren Buffett just bought nearly 9 million shares of this company
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Patrick Morris owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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