Thread by @george__mack

The most VALUABLE piece of investing advice I ever received came from Warren Buffett.

THREAD...

Buffett gave a talk at University of Georgia.

He told the students to look around at their friends and answer the following question:

“If you could get 10% of their earnings for the rest of their lives, what friends would you INVEST in?”

Once you have the 2-3 friends that you’d invest in, explore WHY you’d invest in them.

What values do these individuals hold?

What habits do they engage in?

Here’s the values of friends that made me want to invest:

1. High agency / resourcefulness

2. Consistency

3. Give more than they take

4. Learning machines

5. Live on the edge of their comfort zones or creating a new project

6. Pay attention to small details

After doing this, Buffett suggests you look around at your friends again.

“If you could SHORT 10% of their earnings for the rest of their life, what friends would you choose?”

Again, once you have these friends in your mind - ask WHY you'd short them.

What values do they have that you'll think will harm them?

What negative habits do they engage in?

Here’s the values of friends that I’d SHORT:

1. Narcissism

2. Inconsistency

3. Arrogance

4. Dishonesty

5. External locus of control

6. Map knowledge / Know it alls

Once you these lists, you have finally answered one of life’s wooliest questions:

“What are my values?”

You have guiding principles you can look to embody.

You can extrapolate this further than just financial ROI.

You can look at your friends balance sheets for hapiness, relationships, fitness etc.

Who would you invest 10% in? Why?

Who would you short 10%? Why?

You can download the values you need for those areas too.

This exercise is so powerful because our identity isn’t involved.

“It is easier to recognize other people’s mistakes than our own.” - Daniel Kahneman

Emotion & Ego distort our reality.

It’s so easy to see when a friend should break up with their partner, quit their job or shut down their company.

Yet despite having more information on the subject than you, they still can’t see it.

Why?

Emotion & Ego (Identity)

The Buffett exercise is so powerful because it gives you the ability to view your human operating system in the same way everyone else will:

1. Objectively
2. Don’t care about you
3. Want to know what value you can provide

Self awareness has the Dunning-Kruger effect built into its software.

The most self aware people I know are aware that they lack self awareness.

The least self aware people I know are convinced they are self aware.

Buffett’s investment advice passes Peter Thiels test.

You know your friends better than ANYONE.

This means that you have a SECRET that the rest of the world doesn’t have about their values and habits.

This information gained is truly unique to everyone who applies it.

SUMMARY:

1. Treat your objective analysis of other people as the best form of self knowledge

2. Understand what values you'd invest in and what you would short in every area of life

3. The tactile knowledge of your friends is a secret as unique as your finger print

Talk about this idea and many more in the Modern Wisdom podcast I did with @ChrisWillx

YouTube 👇


Podcast 👇