Warren Buffett's eating habits can teach you a lot about his investing strategy
- Warren Buffett is a unique investor.
- Warren Buffett is a unique eater. I would know, I copied his diet for a week.
- There are three things I learned about his investing strategy from his diet.
You're never going to be Warren Buffett.
Besides the obvious "you can physically not inhabit his body" sense, Buffett's investing prowess is nearly impossible to match and the portfolio of companies he's acquired will likely remain unique.Another peculiar and possibly difficult to sustain piece of Buffett's life that sets him apart is his diet. The Oracle of Omaha, as Buffett is known, consumes what he admits is the diet of a six year old. From Cherry Coke to junk food to peanut brittle, Buffett's diet is extreme. I should know, I ate like him for a week ("and it was miserable!").
While the expedience was awful, in the midst of the sugar and processed meat daze, I had an epiphany. Well, two.
The first insight was there's no way he actually eats like he says he does all of the time. The second was about his investing strategy.
I'm not saying that all of a sudden math problems solved themselves in front of my face and I knew what companies to invest in and when. Rather, I recognized three commonalities:
1. Stick with what you know
Buffett doesn't deviate much. He goes to the same restaurants in his home base of Omaha, Nebraska and he likes the same steakhouse when he comes to New York. Depending on the stock market conditions in the morning he eats the same breakfast.
This is the result of deep knowledge about each restaurant he goes to. He's tried and figured out exactly what he likes and what he's going to get out of the meal. By the fourth day of eating the same breakfast, I knew what I was in for.Similar to the deep knowledge of the establishments he eats at, Buffett studies and knows the companies he invests in inside and out. He's a prolific reader, and is known to do massive amounts of research before diving into an investment.
2. Be indulgent, but not spontaneous
Once Buffett knows what he wants from a meal, or an investment, he goes for it.
Chicken fried steak, hamburgers, extra salt on everything, peanut brittle. Holy s--- was Buffett's diet heavy. It hits you like a rock and sticks in your gut all day. (It's almost a month after the experience and I've only just now worked off the weight from the week).
Similar to the all-in approach to his meals, Buffett typically goes all in on his investments.
For instance, Buffett owns more than 100 million shares of seven publicly companies, and owns more than 5% of 20 different ones. That doesn't include the massive deals Buffett did to buy private companies like Percision Castparts, which he bought for $37.2 billion in 2015, or BNSF Railway, which he acquired in 2009 for a total deal value of $44 billion.
There is a smaller portfolio of stocks attributable to Berkshire Hathaway, but when Buffett takes the reigns on an investment he really dives in. Much like getting a seafood tower, two-pound steak, hash browns, spinach, and coconut cake all in one sitting.
3. Love it
Given the sheer volume of the soda in Buffett's diet, I realized that he really loves Cherry Coke. It may be the most enduring love in Buffett's life besides his family.
Buffett not only knows what he wants, like Cherry Coke, but he also sticks with something because he is passionate in his convictions."Follow your passion," Buffett said in an interview in 2012. "I always tell college students to take the job that you would take if you were independently wealthy. You're going to do well at it."
While this is pretty boilerplate life advice, it does seem to apply to the degree to which Buffett sticks by investments he thinks are sound.
For instance, look at his investment in American Express. Buffett controls more than 17% of the company and, to put it mildly, the company has gone through a rough few years. The share price dropped from around $95 a share in mid-2014 to just over $50 a share in mid-2016. The firm lost Costco, one of its most important clients, and the payments ecosystem was shifting away from the firm.
Yet, Buffett stuck with the investment, which he has held since 1991. He even stood by the CEO of 17 years, Kenneth Chenault, until his retirement on Wednesday. While the company is still facing problems, shares are close to an all-time high again.
Buffett stands by his investments because he honestly believes in them, and he stands by his favorite foods because he genuinely enjoys them.