In the article, Buffett wanted to help his employee get ahead in his working life, so he suggested that the employee list the twenty-five most important things he wanted to accomplish in the next few years. He then had the employee circle the top five and told him to prioritize this smaller list.
All seemed well until the wise Billionaire asked one more question: “What are you going to do with the other twenty things?”
The employee answered: “Well the top five are my primary focus but the other twenty come in at a close second. They are still important so I’ll work on those intermittently as I see fit as I’m getting through my top five. They are not as urgent but I still plan to give them dedicated effort.”
Buffett surprised him with his response: “No. You’ve got it wrong…Everything you didn’t circle just became your ‘avoid at all cost list.'”
An Important Reminder
I read this story on Scott Dinsmore’s site, where Scott explains he heard it from a friend who heard it from the employee in the story: so some details have likely been mutated during this multi-hop dissemination.
But the story nevertheless resonates because it promotes a truth that I think is vital to remember in our current networked age: spending time on lower priority goals, even though they’re helpful and generate value, can leave you worse off than if you had avoided them all together.
The logic supporting this observation is simple.
Your highest priority goals return significantly more value per unit time invested than your lower priority goals.
In addition, your time and attention are limited.
It follows that effort invested on your lower priority goals steals effort from your higher priority goals.
If you spend time on the lower priority goals, therefore, your total quantity of value produced is reduced.
The reason I describe this lesson as particularly vital to our current age is that the behaviors that consume more of our time and attention — e.g., social media, web surfing, chronic networking — often fall onto the low priority end of Buffett’s List of Twenty-Five.
These behaviors are sold to us with the promise that they offer some benefit (e.g., “you never know, the contact you make on Facebook might end up bringing you new business”) — but they do so at the cost of stealing time from the harder efforts that are guaranteed to return a lot of benefit (e.g., make your product too good to be ignored).
It’s with this in mind that it’s useful to remember Buffett’s caution: Don’t just prioritize what’s most important, but support this prioritization by avoiding everything that’s not.
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For another take on this idea see Tip #2 in my 2008 article on the Steve Martin Method — the article, interestingly enough, in which I first mentioned his advice to “be so good they can’t ignore you.”
Buffett's Two Lists is a productivity, prioritisation and focusing approach where you write down your top 25 goals; circle your 5 highest priorities; then focus on those 5 while 'avoiding at all costs' doing anything on the remaining 20.
The rule's origin is reported as advice given by Buffet to his personal pilot, Mike Flint. Flint asked Buffet for career advice, leading to Buffet thinking of the 5/25 rule. Buffet asked Flint to list his top 25 career goals, pick the top five, and avoid the rest until the top five are achieved.
The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay. Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon.
The 5/25 Rule attributed to Warren Buffett, though not directly from him, represents a powerful strategy for prioritising goals and managing time effectively. This rule, often cited in the context of personal development and productivity, is a method to focus on what's truly important and eliminate less critical tasks.
A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds.
Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”
Buffett uses the average rate of return on equity and average retention ratio (1 - average payout ratio) to calculate the sustainable growth rate [ ROE * ( 1 - payout ratio)]. The sustainable growth rate is used to calculate the book value per share in year 10 [BVPS ((1 + sustainable growth rate )^10)].
Buffett has a simple investment rule on retained earnings to assess management's capital allocation. He discussed this concept in a 1983 letter to shareholders. “We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained.”
Regardless of what tribulations you go through, keeping in mind how you'd like to eventually be remembered is the best way to help you achieve it, Buffett said. “Expect some difficulties along the way, but if you're thinking that way, you're more likely to get there.”
See's Candies serves as a prototype dream company for Buffett as it embodies his investment philosophy of investing in businesses with a long-term competitive advantage, reliable cash flows and a customer-centric approach that values quality over quantity.
He is noted for his adherence to the principles of value investing, and his frugality despite his wealth. Buffett has pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Bill & Melinda Gates Foundation.
His biggest weakness is the disadvantages of his strength. He is pretty strict and he doesn't really listen. His opinion are often right, but some don't end up right. When he goes down a track that doesn't make sense, he does not pay attention to anything, which is a weakness for a big business leader like him.
The 2% rule is an investing strategy where an investor risks no more than 2% of their available capital on any single trade. To apply the 2% rule, an investor must first determine their available capital, taking into account any future fees or commissions that may arise from trading.
Graham says to stay within the range of 25/75 to 75/25: We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequent inverse range of between 75% and 25% in bonds.
Introduction: My name is Jeremiah Abshire, I am a outstanding, kind, clever, hilarious, curious, hilarious, outstanding person who loves writing and wants to share my knowledge and understanding with you.
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