When it comes to investing, making billions, and managing companies, Warren Buffett is one of the most famous idols that most people will look upon.
Buffett is the CEO of Berkshire Hathaway, a multi-national conglomerate holding company that wholly owns GEICO, Dairy Queen, BNSF Railway, Lubrizol, Helzberg Diamonds, NetJets, and also owns a portion of Kraft Heinz, American Express, Coca-Cola, Wells Fargo, IBM, Apple, and also major airlines.
How did Buffett able to achieve such an amazing success in his lifetime and able to manage so many big companies all at the same time? Berkshire now owns a diverse range of businesses ranging from retail, railroads, home furnishings, jewelry, newspaper publishing, airlines, electrical appliances and gas utilities.
The company Buffett runs is considered the seventh largest company in the S&P 500 Index by market capitalization. And his company’s stock has the most expensive share price in history costing more than $250K each.
Many people want to learn from Buffett, especially his investing skill. However, one very important key to Buffett’s success in his decades of investment is not just about his skills and ability to identify undervalued companies, it is his ability to divorce himself from whatever that is going on around him.
The Ability to Divorce Yourself from Whatever is Going on Around You
There is no doubt that Buffett is a genius when it comes to identifying companies that are undervalued and he just loves numbers so much. He can read the company’s annual report from back to back.
Besides his skill in finding undervalued companies, another thing that makes him one of the greatest investors in the world is his ability to hold on to the stocks even when the market fluctuates. Buffett seems to be able to ignore the market performance and divorce himself from all the noises around him while holding on to his stocks and his decisions.
This requires a lot of determination and emotional reserve. You see, most people are emotionally affected when the prices of stocks in the market fluctuates. People will tell you to sell or to buy, which eventually will make you become irrational and fearful.
You will become even more emotionally affected when it involves a large sum of money. Imagine you have invested a huge portion of your life savings into the market and suddenly, the price is fluctuating and goes down. People around you keep telling to sell and put the money into another company instead. What will you do?
At this moment, most people will be emotionally affected by the surrounding and the overall market price. They will let go of their stocks at a loss and then invest in something else. They did not hold long enough for the magic to happen.
Buffett on the other hand, is totally different. He is not affected by any of the noises around him.
I know that you know about holding on to your decision and never let others cloud your thinking, but this is easier said than done.
Being able to buy when everyone is screaming “Sell”, and not to buy when everyone is telling you to do so, is a very challenging thing for most of us to do.
And Buffett seems to be able to do this as natural as breathing. And this is also the skill that you need to acquire and develop if you are serious about achieving great success in life.
Arnold Schwarzenegger Says, “Ignore the Naysayers”
This is just like one of the keys to success from Arnold Schwarzenegger, to ignore the naysayers.
Arnold says that his success comes from not listening to what others told him, and instead, follow his own heart.
After his success in the bodybuilding industry, Arnold wanted to venture into the movie industry and build his acting career. Guess what happened, many told him that it is impossible for him to make it in the movies.
Some told him that his name is too difficult to pronounce and some told him that his body is too bulky and no one will want him to act in their movies.
Luckily, Arnold never listens to these people and he ignores them. He chose to follow his dream and listen to his heart. At the end, he became super successful and managed to get into Hollywood as we all know today.
What about you? Are you someone who is easily affected by your surrounding? Do you jump from one opportunity to another when things become tough or someone tells you to?
The Grass Isn’t Always Greener on the Other Side
If you get to Warren Buffett’s Berkshire office, you can see that there are framed front pages from market panic, such as the 1992 financial crash. Buffett always reminds himself not to succumb to the passion of the moment.
You need to be able to think rationally and without putting emotion into plays when it comes to making a decision. When other people are acting irrationally, you need to do the opposite by staying calm and rational.
Social media has become a part of most people’s lives. They can’t live without checking updates and seeing what their friends are doing.
According to an article published on Time, social media such as Instagram and Facebook have greatly caused depression and anxiety among the users.
While it is true that social media has made us easy to connect with each other, but it also made us want to compare with others. When you see someone having a great vacation somewhere, you want to do the same. When you see your friend bought a new car, you are either inspired to want to buy a new car or you felt resent and think that he is just plain lucky.
My friend, learn from Warren Buffett.
Learn to divorce yourself from what is going on in your surrounding and focus on living your own life.
When you see someone starts an e-commerce website and earns a lot of money, you feel tempted and wanted to do the same.
The grass is not always greener on the other side.
What you need to do is to stick to your own plan and never let your emotions control your life. Learn to control your emotions instead.
How to Become Warren Buffett and Never be Affected by Market Sentiment
In one of Buffett’s documentary, he says that he doesn’t recall the color of the walls of his bedroom or his living room because he is so locked inside his own head that he isn’t aware of what is going on around him.
So how did Buffett became such an absent-minded person and emotionally reserve? To answer this, we have to drill into Buffett’s past like the documentary suggests.
According to Buffett, his mother was someone brilliant and ambitious but was plagued with chronic headaches. Buffett says, “You didn’t want to be around her when she was having the headaches. She would lash out.”
Buffett’s sister, Doris also says the same thing about her mother, “When I’d wake up in the morning, I’d listen to hear her voice. I could tell by her voice if it was going to be a terrible day or not.”
And this is one of the big reason how Buffett built up his emotional reserve. It was his reaction to the turmoil he faced at home when he was young.
Now, there is no way you can revisit or turn back time to develop this ability of rationality in you. What you can do is to create reminders to remind yourself to never be affected by your emotions and to constantly follow your plan.
Just like how Buffett uses framed front pages of newspapers and magazines in his office to remind him not to succumb to market sentiment, you can do the same.
This is also why you should constantly review your goals from time to time. You do not want others to affect you and you need to remind yourself of your goals and what you want to accomplish.
As long as the emotion is not in play, you will be able to think rationally and divorce yourself from the temptations around you.
Remember, one of the secrets to success is not just about setting goals, identifying your dreams, or even working hard; it is the ability to stick to your plan and work on your goals without being affected by your surroundings.