Bill Gates shares most important thing he learnt from Warren Buffett

Microsoft founder Bill Gates has paid tribute to his friend and fellow multi-billionaire Warren Buffett, saying that meeting the investor 25 years ago changed his life "for the better in every imaginable way".

Writing in his Gatesnotes blog, the world's richest man recalled being initially reluctant to take time off from his work at Microsoft in July 1991 to meet with the Berkshire Hathaway CEO.

But at their meeting, Mr Buffett immediately made an impression due to his questions about the software business and computing.

"We were suddenly lost in conversation and hours and hours slipped by. He didn't come across as a big shot investor. He had this modest way of talking about what he does. He was funny, but what impressed me most was how clearly he thought about the world. It was a deep friendship from our very first conversation," he wrote.

20 tips from Warren Buffett

  • “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
  • “To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices.”
  • “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
  • "No advisor, economist, or TV commentator -- and definitely not Charlie nor I -- can tell you when chaos will occur. Market forecasters will fill your ear but will never fill your wallet."
  • “What’s required is thinking rather than polling. Unfortunately, Bertrand Russell’s observation about life in general applies with unusual force in the financial world: “Most men would rather die than think. Many do.”
  • “After all, you only find out who is swimming naked when the tide goes out.“
  • “The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.”
  • Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
  • “Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards – so when you see one that qualifies, you should buy a meaningful amount of stock."
  • You must also resist the temptation to stray from your guidelines: If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. "
  • “When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
  • “I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.“
  • “Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
  • “The stock market is a no-called-strike game. You don’t have to swing at everything–you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’”
  • “Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it’s the lack of change that appeals to me. I don’t think it is going to be hurt by the Internet. That’s the kind of business I like.”
  • “Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.“
  • “Our investments continue to be few in number and simple in concept: The truly big investment idea can usually be explained in a short paragraph. We like a business with enduring competitive advantages that is run by able and owner-oriented people. When these attributes exist, and when we can make purchases at sensible prices, it is hard to go wrong (a challenge we periodically manage to overcome)."
  • “Rule No. 1: never lose money; rule No. 2: don’t forget rule No. 1″
  • “I am a better investor because I am a businessman, and a better businessman because I am no investor.”
  • “Time is the friend of the wonderful business, the enemy of the mediocre.”

Mr Gates reveals that he only has two numbers on speed dial from his office phone: his home and Mr Buffett, and says that a conversation with the latter would be the highlight of his week.

"I'm constantly learning things from him. Warren and I love to talk about companies, politics, world events, and new innovations. And it's really exciting to have somebody who's studying these things with a bit of a different background," he says, adding that Mr Buffett is like a father figure to him.

He also revealed that Mr Buffett's favourite foods include hamburgers, ice cream and Coca-Cola, and shared an amusing anecdote about how the Omaha billionaire once set a bad example for the Gates' children by eating a packet Oreo biscuits for breakfast.

Mr Gates said that every time he visited Omaha, Mr Buffett would drive to the airport to pick him up.

"It's a small gesture, but it means the world to me," he wrote, adding that the most important thing he had learnt from Mr Buffett is what friendship is all about.

"Everyone should be lucky enough to have a friend who is as thoughtful and kind as Warren. He goes out of his way to make people feel good about themselves and share his joy about life," he wrote.

Both Mr Gates and Mr Buffett are among the world's richest individuals. According to the Bloomberg Billionaires Index, Mr Gates is ranked first with a net worth of US$83.5 billion (S$112.34 billion), while Mr Buffett is the 3rd richest person in the world with a net worth of US$66 billion.

Mr Buffett is also a trustee with the Bill and Melinda Gates Foundation, which focuses on improving healthcare and education and reducing poverty. Last year, he donated about US$2.84 million of Berkshire Hathaway stock to the foundation.

Forbes' 2017 world billionaires ranking