This Rule Helped Warren Buffett Become a Billionaire
According to a recent Forbes Magazine ranking of the world’s Billionaires, Warren Buffet is ranked #6 with $117.4 billion net worth. He has many famous rules about money and this article will share some of them and how they might be implemented by normal folks who are NOT Billionaires or even Millionaires.
Rule #1: Never Lose Money and Rule #2: Don’t Forget Rule #1
Buffett does not frantically trade stocks, bonds, and Wall Street securities like virtually all the mutual funds or managed accounts offered by Wall Street. Instead, Buffett buys the entire company or a controlling interest in the company. He buys companies that have strong management; a proven track record; and have a defensive moat against competition.
Example #1: In a serious recession, people don’t have extra money to buy big ticket items such as a new car, vacation home or expensive vacations. However, they can afford to give themselves a small treat. Imagine that you have lost 30-50% of your life savings in a major stock market crash and now your 3 grandkids are visiting you for a week. You don’t want to spend $8 for a tiny dish of Gelato in downtown Scottsdale or $5 for a pint of Ben & Jerry’s ice cream. But you can afford to take the grandkids to Dairy Queen, the least expensive national brand ice cream chain in America. Since 1998, Warren Buffett has owned 100% of Dairy Queen.
Practical strategy: Instead of investing in mutual funds, individual stocks, and managed Wall Street accounts, consider a totally different strategy. There are certain annuity products that give you part of the upside of a stock market index but have NO losses if the market declines. Since 1/01/2000, some of these investments have produced double the money for the investor compared to what the stock market index did.
Example #2: If you Google “Marubeni and Wikipedia”, you’ll find an example of an extremely niche investment that Buffett recently made. Marubeni owns PLM Leasing, which is the largest leasing company of refrigerated trailers in America. Due to the tsunami in Japan and the March 11, 2011 Fukushima Daiichi Nuclear Power Plant disaster, Marubeni decided to change the direction of one its main lines of business.
Instead of building fossil fuel coal and natural gas plants across the world, it decided to go 100% into renewable energy. It’s attempting to buy into a company that the State of CA claims has invented the ONLY ZERO-Emission technology that is commercially viable. Buffett’s Berkshire Hathaway acquired over 5% of the stock in this Japanese company, along with four other Japanese trading houses, over the 12-month period ending in August, 2020.
According to a June 19, 2023 Reuters article, this is the largest of any Berkshire-held public stocks outside of the United States. The stocks are all up more than 30% this year, with Marubeni shares up 62%. The stock has more than tripled in price since the end of 2020. Berkshire now owns 8.3% of Marubeni.
Learn about the company the California government says has invented the ONLY ZERO-Emission technology that is commercially viable.
Attend my Free Live Seminars: Thurs. 9/21/2023, 6 pm and Sat. 9/23/2023, 10 am at Hyatt Place, 3535 W. Chandler Blvd. Chandler, AZ 85226, followed by a Free catered meal. Topic is “Secure Your Financial Future: Lessons from Warren Buffett!”
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Dr. Wong earned his Ph.D. in Economics at University of California/Berkeley and has appeared on over 400 TV/radio programs.