Portrait of Warren Buffett, chairman of Berkshire Hathaway Inc.

, by Mukul Pandya, from a presentation at a Wharton executive series, pril !", "###. WARREN BUFFETT ON INVESTING AND LEADERSHIP: Im Wired for This G me! By Mukul Pandya, $enior %ditor, Wharton $chool If you were asked to select a person and told that you could retain "& percent of his or her earnin's for the rest of your life, whom would you choose( $omeone with the hi'hest $ ) or I* test scores( Probably not. +hances are that you would pick someone with a steadfast character, whom you could trust to function well throu'h life. +onversely, what kind of person would you shun( Most likely, the type who cuts corners and is 'enerally undependable. %ach of these ,ualities is a characteristic of choice and can make the difference between success and failure. )hat insi'ht into the link between character and success comes from Warren Buffett, +%- of Berkshire.Hathaway, the world/s second richest man after Microsoft +%- Bill 0ates and ar'uably the most successful investor the world has known. 1evelopin' characteristics such as trustworthiness and inte'rity, Buffett believes, is a matter of formin' the ri'ht habits. 2)he chains of habit are too li'ht to be noticed until they are too heavy to be broken,3 he says. People who stray from these values often show up on Wall $treet4 they may initially even shine4 but eventually they self.destruct. 2)hat is sad, because it does not need to happen,3 says Buffett. 25ou need inte'rity, intelli'ence and ener'y to succeed. Inte'rity is totally a matter of choice .. and it is habit.formin'.3 $peakin' to a packed audience of students, faculty members and staff at the Wharton $chool on pril !", Buffett offered insi'hts into the investment philosophy that has turned Berkshire. Hathaway into a 6"!& billion powerhouse, with holdin's in industries ran'in' from soft drinks to insurance. 7eremy $ie'el, a professor of finance at Wharton, reckons that a person who had invested 6",&&& with Buffett when he was startin' out four decades a'o would have turned that investment into 68" million today. In contrast, had that 6",&&& been invested in $9P :&& stocks, it would have 'rown to 6"&&,&&&. sked what advice he could provide to youn' people on the ver'e of careers in mana'in' investments, Buffett boiled down his principles into four cardinal rules; ". <nderstand the business in which you are investin'. 25ou can/t make money in stocks unless you understand the business,3 he said. 2I look for businesses within my circle of competence.3 Havin' a lar'e circle of competence is less important than havin' one with a well.defined perimeter. !. =ook for sound fundamental economics. Investors should seek out companies that have a sustainable economic advanta'e .. a phenomenon Buffett called 2a castle with a moat around it.3 +onsider +oca +ola, for example. )he company/s brand name has represented en>oyment for

'enerations, which no competitor can buy for millions of dollars. 2$hare of market follows share of mind,3 noted Buffett. ?. @ind competent leadership. +ompanies with a sustainable economic advanta'e need honest, capable and hardworkin' leaders to retain their lead. Berkshire.Hathaway/s mana'ers have one instruction; Widen the moat. )hat keeps the castle valuable. A. Buy at the ri'ht price. Purchases must be made at the ri'ht price if they are to pay off. Buffett cited example after example to show how he had used these principles to make investment decisions durin' his career. s a youn' investment mana'er, he took Moody/s manuals and went throu'h them pa'e by pa'e until he found the companies he sou'ht. bus company in Bedford, for example, had 6"&& a share in cash, but its stock was bein' traded at 6A& a share. Buffett found such deals because he went lookin' for them. 2Bo one will tell you about them,3 he said. 25ou only 'et told about thin's someone is pushin' for some reason.3 Buffett invested in companies like +oca +ola and )he Washin'ton Post for similar reasons. Berkshire. Hathaway built its empire on the success of these investments. sked why he has not retired despite his phenomenal wealth, Buffett said the reason is that he has more fun doin' what he does than anythin' else. 2)he fundamental thin' is that the process should be fun,3 he said. 2I had >ust as much fun when I had 6"&,&&& to invest as I do now. It/s craCy to do thin's for your resume. It/s like savin' up sex for your old a'e. 5ou should do what you en>oy as you 'o alon', and work with people you admire. I look forward every day to the next day. I/m wired for this 'ame.3