How To Communicate Like Warren Buffett

[Dien Rice]

Warren Buffett is well-known for his communication skills. (As well as for making lots of moolah!)

His annual "Letter to Shareholders" is widely quoted. Why?

In part, it's because he lets his personality shine through!

Here's one of Buffett's witty quotes...

"Ben Graham told a story 40 years ago that illustrates why investment professionals behave as they do: An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence”, said St. Peter, “but, as you can see, the compound reserved for oil men is packed. There’s no way to squeeze you in.” After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.” Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.”"
- From the Berkshire Hathaway 1985 Chairman's Letter

Also, here's another quick example... (The bit in square brackets are added by me.)

"And now a small hint to Berkshire directors: Last year I spent more than nine times my salary at Borsheim's and EJA [businesses owned by Berkshire Hathaway]. Just think how Berkshire's business would boom if you'd only spring for a raise. [Buffett only pays himself $100,000 a year - a quite low salary for the CEO of a major corporation.]"
- From the Berkshire Hathaway 1998 Chairman's Letter

Now, here's how Warren Buffett does it, according to an article originally from the Wall Street Journal...

This year's report began like all the others: handwritten on a yellow legal pad. His first words are: "Dear Doris and Bertie" -- his sisters. He pretends he is writing a letter to them to keep a homespun tone, to avoid jargon and speak candidly.

"My sisters aren't financial experts, but they're intelligent and interested. I don't try to impress them, but I don't talk down to them either," he says.

Writing at home or on his company's Gulfstream IV jet, he scrawls notes and then passes them to an assistant to be typed and triple- spaced, "so I have room to make changes," he says. This year, he went through dozens of triple-spaced drafts. He eventually crosses out his sisters' names, substitutes "To the Shareholders of Berkshire Hathaway Inc.," and prints it out. This version is sent to Carol Loomis, a longtime friend of Mr. Buffett's and editor-at-large at Fortune magazine, who has edited his letters for 25 years -- and has three bracelets made up of enameled copies of annual-report covers to show for it.

From http://www.rasmusen.org/g492/buffett.wsj.htm

A lot of copywriters give the same advice. Copywriter Gary Halbert says - write a letter to your Mom! Warren Buffett writes his letter to shareholders as a letter to his sisters - then crosses out "Dear Doris and Bertie" and replaces it with "To the Shareholders of Berkshire Hathaway".

So if you wanna write like Warren Buffett... That's how you do it!

(I should give a thanks to my brother Thomas, who first told me that this is how Buffett wrote his letters to shareholders. I found it fascinating that it agreed with what some copywriters say!)

Hope you found that interesting...!

Cheers,

Dien

P.S. Here's another great quote from the letter to shareholders...

"Leaving aside tax factors, the formula we use for evaluating stocks and businesses is identical. Indeed, the formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.).

"The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was "a bird in the hand is worth two in the bush." To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush - and the maximum number of the birds you now possess that should be offered for it. And, of course, don’t literally think birds. Think dollars.

"Aesop’s investment axiom, thus expanded and converted into dollars, is immutable. It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. And neither the advent of the steam engine, the harnessing of electricity nor the creation of the automobile changed the formula one iota - nor will the Internet. Just insert the correct numbers, and you can rank the attractiveness of all possible uses of capital throughout the universe."

- From the Berkshire Hathaway 2000 Chairman's Letter

If you want to, you can find the Letter to Shareholders since 1977 at this web site - http://www.berkshirehathaway.com/letters/letters.html . A lot of it is quite technical, but you can learn a lot from it too...

Fascinating insights, Dien. Thanks for sharing.

Yes, a copy writer is always told to 'write a letter to a friend or someone you know' to make it friendly and cut out biz-jargon but this is one of the best 'show how it's done' posts on the topic I've seen. You can bet that I'll be cruising the site mentioned to see what else I can glean from it.

I think 'The Kipplinger Letters' used this same principle to good advantage also. My bosses many years ago used to pass them along to me to read and return. I recall that they had a certain 'personalized' business style to them back then.

Sandi Bowman

Thanks Dien - that was really interesting.

I've been known to get in trouble a time or two for some things I've written.

Custody fights seem to bring out the worst in people and the judge has told me in the past that it would probably be best if I didn't use terms such as "crazy psycho bitch" in my emails to my son's mom.

It's tough though, because I can't seem to find any words that could properly describe her any better sometimes.

I should probably think about using the Warren Buffett approach and start each email with "Dear Mom - Or even better, "Dear Judge"

Jim

[Dien Rice]

Hi Sandi,

Originally Posted by Sandi Bowman

Fascinating insights, Dien. Thanks for sharing.

I'm glad you liked them! I've read through a few annual reports in the past - and no others that I've seen so far have the "folksy" feel that Buffett's does!

Yes, a copy writer is always told to 'write a letter to a friend or someone you know' to make it friendly and cut out biz-jargon but this is one of the best 'show how it's done' posts on the topic I've seen. You can bet that I'll be cruising the site mentioned to see what else I can glean from it.

I think 'The Kipplinger Letters' used this same principle to good advantage also. My bosses many years ago used to pass them along to me to read and return. I recall that they had a certain 'personalized' business style to them back then.

I hadn't heard of the Kiplinger Letters! Anyway, I searched around, and found a sample copy...

You can see it at http://www.kiplinger.com/store/ (then click on "See a Sample Issue" under "The Kiplinger Letter")...

It looks fantastic! I like how it's short and sweet, to the point...

Thanks for mentioning that! Looks like it could be a useful tool potentially...

Cheers,

Dien

[Dien Rice]

Hi Jim,

Originally Posted by James Anthony

Thanks Dien - that was really interesting.

Glad you liked it.

I've been known to get in trouble a time or two for some things I've written.

Custody fights seem to bring out the worst in people and the judge has told me in the past that it would probably be best if I didn't use terms such as "crazy psycho bitch" in my emails to my son's mom.

It's tough though, because I can't seem to find any words that could properly describe her any better sometimes.

I should probably think about using the Warren Buffett approach and start each email with "Dear Mom - Or even better, "Dear Judge"

Hmm... This is the first time I've heard of someone thinking of using "Dear Judge"... But - hey - every unique situation has a unique solution, right? It might work!

I hope it all works out...

Dien

another thing Gary Halbert taught is that you should copy great ads by hand. So you know how it is written. I did that but not enough. I got a whole collection of the letters and ads he told his son and subscriberts to get. Some I don't he has.