Yale School of Management

Lessons from the Sage of Omaha

A group of Yale SOM students recently sat down with legendary investor Warren Buffett. Riley Ford ’17 reports on the visit. 

December 6, 2016

Every year, Warren Buffett takes a break from overseeing Berkshire Hathaway’s sixty-plus subsidiaries and $550 billion balance sheet to sit down with a handful of business school students, eat steak and strawberry shortcake, and answer questions on everything from leverage (he’s not a fan) to love (“It’s the greatest force in the universe,” he says).

Last month, SOM was lucky enough to partake in this tradition, which over the years has quietly become a rite of passage for Buffett acolytes pursuing their MBAs. Led by SOM’s Investment Management Club (IMC) and International Center for Finance (ICF), our group of twenty students made a red-eye pilgrimage to Omaha for a day that began with a visit to the 77-acre campus of Nebraska Furniture Mart, one of Berkshire’s local holdings that Buffett bought in 1983. After sampling some of Omaha’s best sofas, we relocated to Anthony’s Steakhouse, a classic chophouse and Buffett favorite, for our Q&A and lunch with the Berkshire CEO, followed by two more subsidiary visits to Borsheim’s and Oriental Trading Company.

Buffett, who spent over two and a half hours answering questions from his perch on a wooden stool, spoke candidly about every subject raised by the group—with the exception of Berkshire’s recent, uncharacteristic investment in four major airlines. “We can talk about that someday—when it’s over,” he said slyly. “I can promise it will be an interesting story.”

One recurring theme of the chat was Buffett’s insistence on temperament, rather than superintelligence, as the crucial ingredient of successful investing. He pointed to the 1998 meltdown of hedge fund Long-Term Capital Management, which boasted two future Nobel prizewinners on its roster, as one of many examples. There is no correlation between IQ and the ability to avoid irrationality or fear, Buffett argued. “Every once in a while it will rain gold, but it will happen when everyone is hiding and the skies are dark—and when that happens, you need the courage to go out with a soup ladle and not a spoon. If you’ve got an IQ of over 130 but can’t do that, you might as well sell those extra points.”

Buffett also stressed the importance of showing good judgment in people, both in professional and personal contexts. He argued that humans naturally conform to the traits and values of those around them, making the ability to pick good people among the most essential skills a manager or investor can possess. For the same reason, echoing another famous Buffett-ism, he called choosing a spouse “the most important decision you’ll ever make.”

Following a memorable group photo op and our final subsidiary visits, the SOM group braved an early Midwestern blizzard to return to New England in time for Saturday’s Harvard-Yale Game, with many arriving in Boston after nearly twenty hours of round-trip travel in the previous day-and-a-half. All seemed to agree it was well worth it. 

About the author

Riley Ford

MBA Candidate, Class of 2017