The owner of a farm business can learn from the wisdom of famed investor Warren Buffett, not just because of the incredible wealth he has amassed, but also because of his unique perspective on things.
Each year, it's valuable to devote some time to check Berkshire Hathaway’s Annual Report and read Chairman Buffett’s remarks. Many have also enjoyed reading anything his late colleague Charlie Munger (whom Buffett referred to as his business partner) wrote. Munger passed away early in 2024, but his wisdom remains influential.
After reading through the past year’s annual report and reflecting on what has been read from Buffett and Munger over the years, a few lessons have been compiled from their wisdom. These particular lessons are not about the markets or investing. Everyone knows Buffett is a shrewd value investor and business builder with a knack for finding business bargains and amassing great wealth. But he’s more than that, and this article focuses on some of his other principles and traits that may change how one thinks about their business.
1. Know Your Track Record
Berkshire Hathaway’s annual report regularly features a table summarizing the performance of the company for almost 60 years since the current management, led by Buffett, took over. The returns are impressive, to say the least. But what’s even more remarkable is the consistency throughout the decades.
There were ups and downs, of course. But in general, there is consistent, steady progress through the years.
As a farmer, it might be interesting to lay out your track record on an annual basis. While Berkshire Hathaway expresses its two key figures as per-share book value and per-share market value, you can determine what you want to measure. That might include gross and/or net income, net assets, or something else that you find relevant. How you measure the financial success of your business is up to you.
A simple spreadsheet that you can look at once a year, or perhaps twice or even quarterly, can be revealing. You can see the long-term trend and review your performance over time in a simple, basic manner. The results might surprise you.
Reviewing one’s company statistics can provide certain satisfaction. While the data and charts might not show results as astounding as Buffett’s, seeing a gradually and steadily higher trend over time, despite some down-years, confirms that persistence pays off and helps keep the tough years in perspective. It also serves to remind us that after a particularly great year, it’s wise to be cautious about expecting that exceptional return to continue.
Note: Berkshire’s compounded annual gain from 1965 to 2023 was 19.2% for the per-share book value and 20.8% for the per-share market value. Average annual increases like that, over nearly six decades, are phenomenal.
2. Keep a Positive (Yet Realistic) Attitude
In some of the annual reports, including 2023, Buffett talks a little about his take on economic conditions and the future of America. He is unequivocally and unapologetically upbeat.
He has said, “The babies being born in America today are the luckiest crop in history.” He makes the point that the families living in his upper-middle-class neighbourhood (yes, Buffett still lives in a relatively modest home in a modest area) enjoy a living standard better than that achieved by the ultra-rich John D. Rockefeller Sr. at the time of Buffett’s birth.
Buffett doesn’t buy into the misery themes sold by political parties, noting that “candidates can’t stop speaking about our country’s problems, which of course, only they can solve.”
Buffett’s somewhat contrarian positivity is appreciated. It’s worth taking a step back in our own lives and businesses and asking ourselves:
– What is good about right now?
– What opportunities are offering themselves to me today?
Sometimes the general population seems to like to complain, worry, or talk about everything that is going wrong. Farmers might be prone to that too. And legitimately so. After all, the commodity markets and other aspects of work and life in agriculture can be incredibly tumultuous.
However, a positive attitude can not only help us appreciate the business we’re in, it can help us make sound business decisions and avoid acting out of fear or panic when times get tough. Of course, it’s important to be realistic too. This is not about being idealistic or blind to risks. The message is this: If Buffett had focused over the years on all that was wrong about America and the world – and all that could conceivably go against him – he would not have forged ahead with the work and decisions that took his business to the heights it reached.
3. Take Time to Think and Learn
In our fast-paced culture, it seems like we’re expected to form opinions, make our minds up, and take action without taking the time to learn, think, and reflect. We live in an era of 6-second soundbites, 280-character tweets, and internet articles we scroll through instead of reading.
Both Warren Buffett and Charlie Munger were different. They took their time. They thought deeply. They were not swayed by unsubstantiated opinions or groupthink.
Over the decades, Buffett has seen many people investing in the latest fad or rushing to exit their holdings in panic. Buffett never got caught in speculation, nor was he driven out by fear. He stuck to the teachings of Benjamin Graham, a sage investor best known for developing guidelines for “value investing.”
4. Look for the Chances You Might Regret Not Taking
Buffett has made many mistakes and admits to them. It’s an important lesson to us all that with great success comes errors and losses along the way. But it’s especially interesting which mistakes Buffett views as the worst.
To him, his biggest errors involved missed opportunities. Yes, in hindsight his primary errors were his decisions not to buy into what turned out to be successful companies. Buying the wrong ones turned out to be his lesser errors.
It’s impossible in the farming business – or any business – to get through unscathed. We’re all going to make mistakes. Lots of them. But there are mistakes, and then there are real regrets.
If you’re considering something – an opportunity, a risk, an idea – ask yourself this: if I never did it, would I regret it?
What are the chances in your own life or business that you might regret not taking?
Buffett was labelled the richest man in the US in 2008. He is said to be worth over $100 billion as of 2024. Buffett, now 93 years old, is still incredibly sharp and still running what could be termed the most successful company in the world over the past 60 years. That in itself is inspirational.
