At Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial)'s 2019 annual meeting, one young shareholder asked Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) an interesting question. The shareholder wanted to know when Buffett and Munger realized that they were "ready to manage other people's money," and what advice they would give to others who wanted to do the same.
In his answer, the Oracle of Omaha gave insight into how he first started managing money for others in the original Buffett Partnership. He said that in the beginning, it was "a number of family members" who initially approached him asking if he would manage some of their money when he came back from New York, where he worked with the dean of value investing, Benjamin Graham.
"They wanted me to help them out with stocks as I had earlier before I'd taken a job in New York," Buffett said. "And I said I did not want to get into the stock sales business, but I wanted to ... I enjoyed investing," he continued.
As Buffett went on to explain, he tried to make it clear to his first partners that he was in total control of their money and required their full trust. "What I was worried about was not how I would behave, but how they would behave," he said. He then described how he initiated these first partners into his investment operation:
"And what I was worried about was not how I would behave, but how they would behave, because I needed people who were in sync with me. So, when we sat down for dinner in May of 1956 with seven people who either were related to me, or one was a roommate in college and his mother.
And I showed them the partnership agreement, and I said, 'You don't need to read this.' You know, there's no way that I'm doing anything in the agreement that is any way that ... you know, you don't need a lawyer to read it or anything of the sort.
But I said, 'Here are the ground rules as to what I think I can do and how I want to be judged, and if you're in sync with me, I want to manage your money, because I won't worry about the fact that you will panic if the market goes down or somebody tells you to do something different. So, we have to be on the same page.
And if we're on the same page, then I'm not worried about managing your money. And if we aren't on the same page, I don't want to manage your money, because you may be disappointed when I think that things are even better to be investing and so on.'"
This answer seems to suggest that, in the beginning, Buffett wasn't particularly bothered about managing other people's money -- he just really enjoyed investing. You could even argue that his response indicates that he didn't really want the hassle of having others involved, and only did it as a favor to others. Perhaps Buffett never wanted to be a famous investor at all.
The main takeaway from this answer seems to be that if you want to be a good investor, you need to enjoy what you do. If you don't enjoy it, and are only investing for fame, wealth and glory, it might not be the right career path.
Buffett has gotten to where he is today because he is willing to spend hours upon hours researching companies and foregoing many of life's pleasures in favor of stock research. He can only do this because this is what he enjoys.
This is a fantastic lesson for investors. If you stick to what you love and carry on going, there's no need to rush. The returns will come. However, if you don't enjoy what you are doing, it is going to be a lot harder to make a success of it.
Disclosure: The author owns shares in Berkshire Hathaway.
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