Saturday, January 06, 2007

Riches and Price versus Wealth and Value

Like Warren, most of us will find the best way to own a business is owning parts of it through the stock market. Over time, if you end up being smart at the investment game, you can use the earnings of your business to acquire more ownership in the same business or in other business, and eventually, the whole business. Actually, investing in a business to build wealth may be easier than starting and managing your own business. That’s been the Warren Buffett strategy.

With the approaching Chinese New Year, maybe it is a good time to think deeply about the difference between being rich and being wealthy, and price and value. Being rich is having money, which can be temporary in nature and is often brief. Riches are about excess and indulgence. Ask yourself how long you would be able to feel the happiness and desire after you bought a piece of dress, pants, shoes, watch or even a luxurious car which you have been eyeing for some time. Whereas being wealthy is having knowledge, doing what you enjoy, learning about things you like, expanding your knowledge and horizon of views on life, personal relationship success, a sense of humor, and a basic foundation of principles. Price is what you pay and whereas value is what you get. For example, you may pay a high price for something whereby you cannot extract any value more than the price out of it.

So the focus to life success should be on the principles of becoming wealthy: firstly, to acquire knowledge, to have a desire to keep learning so that your interest can be sustained because if you stop learning, naturally interest will deteriorates too. Then with knowledge, you are in fact accumulating wealth over time and with the right principles, you can pass it on to the future generation like what Warren, Bill, Andrew, Benjamin Graham and many others did, for the good of society. It does not matter if you adopt some or all of these wealth principles, most importantly, one must be able to make sense out of it. Warren said it best, “Money will not change how healthy you are or how many people you love.” Money may decide who gets what opportunity but over time, you measure success by knowing who loves you and what makes them love you, and the process of getting there rather than the proceeds.

He still lives in the same house since 1958, still eat the same food and have the same drink he had all along. According to him, a man is rich to what he has, and a man is wealthy according to who he is. So true wealth is not in how much he’s worth but rather his character and values on how he sees the world. There’s no quick get-rich scheme or sure-to-get-rich scheme in this world. Instead, a better approach is a get-rich-slow program which has been tried and tested with the wealthy principles as earlier pointed out. And this involves patience, focus, lots of hard work, an unyielding endurance, and application of these principles, and all this are controllable by a person. A lady once asked at Berkshire annual meeting: “Mr. Buffett, I only have one B share,” And he interrupted and said, “That’s ok, lady. Between you and me we own half the company. What’s your question?”

So from this, it kind of gives an insight into how he views things. With the extraordinary wealth and timeless principles, Warren has a platform and the opportunity to teach and advance investment and life education. He takes you from outside of riches and price to the inside of wealth and value. If one can distinguish the meaning behind the difference of "Riches and Wealth", and "Price and Value." It is one of the highway to a better quality of life.

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