Warren Buffett: The Art of Spending Money Wisely
When it comes to spending money, most people will say that anyone can spend money, it’s just a matter of not having enough to spend. However, Warren Buffett’s answer to this question is slightly different.
From May 3rd to 5th this year, Berkshire Hathaway, chaired by Buffett, held its annual shareholder meeting in the investment mecca of Omaha, USA. Tens of thousands of investors gathered in Buffett’s hometown, the small town of Omaha, Nebraska.
While it is common for companies to hold annual shareholder meetings, this particular one is quite remarkable because it is where one of the world’s most outstanding investment experts, Buffett, shares his latest market insights and investment strategies. Every year, tens of thousands of shareholders flock to this small town, injecting vital funds into its economy. Moreover, the shareholder meeting lasts three days, with the first day dedicated to shopping, allowing shareholders to indulge in spending. Buffett encourages you to spend in his hometown—not only a gesture of goodwill but also a boost to his company’s products.
As the shareholder meeting officially commenced, Buffett’s table was adorned with a large box of See’s candies and a can of Coke. It is widely known that Buffett has a sweet tooth, and Berkshire Hathaway is a major shareholder of these two sweet products. The placement of these candies and soda serves as clear advertising—buy more of his company’s confectioneries.
Buffett clearly hopes that you will spend money on products from his hometown and his company. But how should his company’s cash be spent? According to his financial statements, the company currently holds $180 billion, which Buffett expects to reach $200 billion by the second quarter. So, how should this substantial cash reserve be managed? A closer look at his statements reveals a different approach compared to his encouragement for extravagant spending on his products.
Firstly, this money is not sitting idly. With interest rates in the US exceeding 5%, the monthly interest income generated by this cash reserve is astonishing. Secondly, Buffett has a unique perspective on how to utilize the company’s cash. He stated, “I think that we onstage people don’t have a good idea of how to utilize this money. Many people are always swinging their bats, but we swing only when the time is right. We don’t always aim for returns exceeding a hundred billion; a return of a million can be sufficient now because attractive investment opportunities are hard to find. There may be changes ahead; let’s wait and see.”
It is evident that Buffett, known for his investment prowess, becomes quite frugal when it comes to his company’s cash. His art of spending is simple: “swing the bat only at the right moment.” Over his 80 years of investing, he has weathered multiple stock market crashes, wars, terrorist attacks, economic crises, yet managed to steer Berkshire Hathaway safely and expand its footprint with the stock value skyrocketing hundreds of times. His adept management of his company’s cash signals that he is on the right path.
Buffett’s investment patience is unparalleled in the world. Holding a considerable cash reserve, he leisurely awaits the opportune moment to make his move. This moment of “swinging the bat” could arrive during a significant stock market downturn when many incur losses and flee. It could also involve discovering a high-quality stock hidden from sight or even investing in Japanese companies during the “lost three decades.” Regardless of the scenario, Buffett’s 80 years of experience have undoubtedly brought substantial wealth to his shareholders. Hence, nobody can claim that this old man is stingy when it comes to spending money.