Jason and Emilia discuss some of their favorite quotes by Warren Buffett and the movie, Becoming Warren Buffett.
Below is the full transcript:
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Announcer: Welcome back, America, to Sound Retirement Radio where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence and freedom as you prepare for and transition through retirement. And now, here is your host, Jason Parker.
Jason: America, welcome back to another round of Sound Retirement Radio. It’s so good to have you tuning back in. I have Emilia Bernal here with me this morning. Emilia, welcome back.
Emilia: Hello. Thank you.
Jason: So, we like to start the morning right two ways. The first one is by renewing our mind, and I have a verse here from us. And I went back and read this one again, and for our listeners out there, I really encourage you to read this entire, just this entire section from Acts. It’s Acts 9:1 through … Well, just read from Acts 9:1 through 43. It’s just, the whole story is great. But it starts out with this guy named Saul. And it says, “Meanwhile, Saul was still breathing out murderous threats against the Lord’s disciples.” And so, I just love how they start this … the picture of this guy breathing out murderous threats. I mean, he is one angry dude. Then, the verse that I wanted to share this morning was this.
It was verse three that says. “As he neared Damascus on his journey, suddenly, I light from heaven flashed around him. He fell to the ground and heard a voice say to him, ‘Saul, Saul, why do you persecute me?'” I was just thinking, “Man, what way to get somebody’s attention.” Knock them to the ground, bright lights, loud voice. Then the story goes on to say that he was blinded for three days. But the Lord, when He wants to get your attention, He’s going to get your attention. I just love that story, it’s a good one. The story about how Saul becomes Paul. All right, Emilia, what’s our joke for this morning?
Emilia: Thank you for sharing that. Okay, here goes my joke. What do mermaids wash their fins with?
Jason: I don’t know.
Emilia: Tide.
Jason: I like that one.
Emilia: Yeah. I know, I told it to Astri earlier today, she’s our secretary up front, and she was like, “I don’t get it.” I’m like, “What?”
Jason: Tide.
Emilia: She’s like, “Isn’t that harsh on their skin?” I said, “It’s for their fins.”
Jason: Episode 178, we’re doing one a little bit different this time, because Warren Buffett is just, he’s brilliant. I had the opportunity … I use one of those Amazon Fire Sticks for watching … so we have Netflix through the Amazon Fire Stick, but Amazon also has videos that you can rent through your TV. One of the ones that caught my attention was a video called Becoming Warren Buffett. I watched that, and it was so good, that as I watched it I made several notes about things that were said. I wanted to start today off with some of my favorite quotes by Warren Buffett, but then I want to transition into the movie and some of the things I wrote down. Just kind of a different flavor. But then relate it back to retirement planning as well.
Emilia: Sounds great. I’m excited, it’s going to be a little different see where it goes. Yeah. I have the pleasure of getting you some of these quotes today. The first quote that we have today from Warren Buffett is, “It’s insane to risk what you have for something you don’t need.”
Jason: It’s insane to risk what you have for something that you don’t need. Man, if that doesn’t apply to retirement planning. Where this really comes back to me, for so many people, is this balance between fear and greed. I say this all the time, people just taking on way more risk than is necessary as they make this transition into retirement for something that they don’t need, which is they’re chasing return. Emilia, when we’re doing planning for people, I always like to say, “Hope for the best, plan for the worst.” We always make projections out into the future being really conservative in terms of rates of return. But the reason that’s so powerful is if we can show people, “Hey, life is really good.”
I’ll never forget one time we sat down with a gentleman, we said, “If you’re just making 2% per year for the rest of your life, not only will you never run out of money, but you’re probably going to end up leaving about $2 million to your heirs.” When he had that realization from a planning standpoint, that 2% life looked that good, it really shifted his outlook on what was necessary and what he was trying to accomplish. I just love that first quote by Warren Buffett. What’s the next one?
Emilia: Yes. Our next quote, “Rule number one, never lose money. Rule number two, never forget rule number one.”
Jason: That’s a Warren Buffett classic. I don’t even know if there’s much more that needs to be said about that.
Emilia: Yeah, it’s kind of like rules of Fight Club, “Rule number one, nobody talks about it.” Yeah.
Jason: I really like that movie, Fight Club. It’s been a long time since I’ve seen it.
Emilia: It’s kind of hard to catch, yeah, but they have these rules, and they always go back to that rule number one.
Jason: Okay. His rule number one is to never lose money. Now, obviously, if we’re going to be invested. See, Warren Buffett says his favorite holding period is forever. If you never plan on selling, I guess, unless the company folds, you probably never going to lose money in it. But for retirees, I think that’s just so important. It’s something that we hear from a lot of people. I just heard it again this morning, actually, a couple came in, they said, “We’re really happy with what we’ve accumulated. We just don’t want to lose what we’ve got now.” There’s a lot of concern out there. A lot of market conditions that … not just market conditions, but kind of the climate in Washington DC. A lot of reasons that people have these concerns today. I think shifting out of this accumulation mindset and into a preservation mindset is what everybody entering retirement needs to think about.
What’s the purpose of the money? Why do you have it? For most people it’s lifestyle, it’s income, it’s cash flow.
Emilia: That’s great. That is a lot of information that people, I guess, what my question would be for you then Jason is when is it that people realize that? Is it when you put the plan in front of them and they see it for the first time? Or do they come in with that expectation of, “Do I have the money?”
Jason: One of the things I love about the work that we get to do is there is so much uncertainty in that first meeting. One of the question I like to ask people is, “Hey, if we could just accomplish one thing today, what’s the most important thing to get out of our time together?” They will share with me, you know, “We just want to know that we’re on the right track, that we’re not making any mistakes, that we’re thinking about everything that we should be thinking about.” In that second meeting, when I get to sit down with people and show them a year-by-year cash flow plan, and boy, just to see, it’s almost like you can see the weight being lifted off their shoulders.
When I can tell people, “Hey, you’ve really done a good job here.” I love when I get to have that conversation. I don’t get to do that always. Sometimes I have to tell people, “We’ve got to figure out kind of another game plan, because you haven’t done such a good job.” Those are harder conversations. But most of the people I think have done a good job, and it’s getting that validation, and that second opinion, what a wonderful. I wish I could bottle that experience up and share it with other people, because there’s truly … the feeling in the room just changes completely when we get to that point in the planning process.
Emilia: It almost sounds spiritual. You’re just like, “Aah.”
Jason: Almost, yeah. We have to think people have bene working their whole life for this moment. To know that they’re on the right track, and that they’ve done a good job, man, that means a lot.
Emilia: It’s like competence in that piece of mind, like you always say.
Jason: Yeah.
Emilia: Yeah. Our next quote. “I will tell you how to become rich, close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
Jason: Another classic Warren Buffett. Another way that I’ve heard him say this is, “Buy when there’s blood in the streets. When everybody is running for cover, get out of dodge.” I had this experience with a stock that I personally purchased for myself several years ago. There was, I won’t say the name of the company, but there was a lot of bad news at the time, because there had been this big identity theft ordeal that had just taken place in the stock, just based on this news about this identity theft that happened with this company. The stock just plummeted, the price just fell apart like within a matter of days. I saw that and I said, “Pff-”
Emilia: Follow the blood.
Jason: My wife likes that company, I don’t think they’re going anywhere, anywhere soon. I bought it at really a big discount, margin of safety, as Warren Buffett would say. But as it relates to today, there’s a lot of euphoria, a lot of optimism. We’ve just had these massive tax cuts, the stock market just seems to keep going up, we just hit the longest bull market in the history of the stock market. Think about that, the longest bull market in the history of the stock market, the history of the stock market.
Emilia: Yeah, I saw that in the news, and I was like-
Jason: Things have been going up for a long time, and Warren Buffett said in 2017, he said in his letter to shareholders, he said that they’re sitting on a bunch of cash, because he said there’s a lot of good companies out there, but he just didn’t find anything that was really a good price to deploy some of that cash. I think, if Warren Buffett says, “Be fearful when others are greedy.” It sure seems like we’re in a greedy phase right now. I think it’s a time to be fearful. It’s a time to … I don’t like the word fearful, but it’s definitely a time to be reconsidering if you’re getting close to retirement. All these risk stuff doesn’t mean anything until you have to depend on the money. Then all of a sudden risk becomes real.
Emilia: Yeah, that’s what retirement is, depending on your money.
Jason: Yeah.
Emilia: All right, so our next quote today, “Risk comes from not knowing what you are doing.” Plan, that where the plan comes in.
Jason: Not knowing what you’re doing, yeah. You know, this is not where most people spend their entire financial lives is building retirement plans. Most people do it once. We’ve had the good fortune to work with hundreds of people and help them on this journey into and through retirement. I think it’s incredibly risky to not get a second opinion and just make sure you really know what you’re doing and just that you’ve had somebody help think through all of the different scenarios that could unfold as you’re making that transition.
Emilia: Yeah, that’s great. I’m kind of excited about this next quote that we’re going to, I mean, they say behind every man is a strong woman.
Jason: Okay, before you share this quote. This first several quotes were just some of my favorite quotes from Warren Buffett, but this next several quotes are all directly from that movie Becoming Warren Buffett. Just to kind let listeners know where these came from, because I stopped the video, I rewound, and I wrote them down as they went. My son was getting really irritated with me.
Emilia: Here we go. This is a quote from Susie Buffett, Warren Buffett’s wife. “Whoever you are in life, you don’t want to think you wasted a lot of your energy and living time on something useless.” Did I read that wrong?
Jason: Well, it’s actually life. Yeah, life, so. Whoever you are in this life, you don’t want to think you wasted a lot of energy and life and time on something useless.” Yeah. Now, boy, that was such a powerful statement by his wife. I didn’t realize this, but Warren Buffett was separated from his wife for a long period of time there. But then, in the video it said that Warren Buffett spends five to six hours a day reading. I thought, “Man.” There’s one my favorite quotes, one of my favorite verses in the bible says, “Seek and you will find.” Warren Buffett’s whole life has been focused on seeking financial wealth.
He said even from a young age, he always knew he was going to grow up to be rich. He always knew he was going to grow up to be wealthy. You know what? When you spend five to six hours a day reading financial statements, you find exactly what you’re looking for. It’s really an incredible talent that Mr. Buffett has. But I want to share this, because a little bit of spoiler alert if people watched the video, there was something he said at the very end, which actually made me kind of sad, which was, they asked what happens when you die? Warren Buffett said that he was agnostic and he has no idea what will happen. As he said that, I thought to myself, “Man, his wife Susie says whoever you are in this life you don’t want to think you wasted a lot of your energy and life, and time on something useless.”
If I had the opportunity to talk in Warren Buffett’s ear, I would say, “Hey, Warren Buffett, there are so many great books out there from these amazing teachers about what does happen for believers when they know that Jesus is our lord and savior.” If he would to spend five to six hours a day reading those books for the next month, how that may change his outlook on what happens. I just would hate to think that at the end of your time all you have to show for is a big pile of money, I just don’t think that’s the most rewarding life. But seek and you will find.
Emilia: Yes. That kind of takes me up to this next quote that you have here from the movie as well is one word that has helped you the most, and he talks about focus. This reminds me of my husband right now, because he just is like, “You have to get laser, super focused on everything and that’s how things happen.” I said, “Okay, focus, focus.” It kind of related back to what’s going on with me right now, but yeah. Focus six hours. I mean, think about the focus for that.
Jason: Yeah, he goes in his office, he closes the door, and he starts reading.
Emilia: It’s a job.
Jason: It is a very big job, and a lot of people have entrusted their well-being, their financial well-being, and obviously Mr. Buffett takes that responsibility very seriously, because that’s what keeps him so sharp to be able to continue to read like that and have that focus. But yeah, that one word. What was interesting in the movie was, the way that that was introduced is Warren Buffett were at a dinner together, and Bill Gates dad was hosting the dinner, and he asked both … this is the way I remember it, he asked both Warren Buffett and Bill Gates, “If there was just one word that you could describe what’s made you successful.” They both said almost in unison, “Focus.” I guess that kind of kicked off this long-term friendship that they’ve had.
But there’s, I think, for all of us, two of the wealthiest people on the world say that the one thing that’s made the biggest difference, the one word they would point to is the ability to just focus on one thing, especially in this world we live in today, when there are so many distractions. There are so many things pulling us different ways. One of the things Warren Buffett talks about is the ability to say no. The most successful people say no the most. Anyways, I just thought that was great.
Emilia: Yeah. Another quote we have here from the movie is, “It’s amazing what Americans accomplished with just half of their talent.”
Jason: Yeah. That’s-
Emilia: Half.
Jason: Yeah. What he was saying was, you know, back in the 1950s, and for a long time, women in our country have not been treated equally, and they haven’t had the same opportunities. But that’s all changing and it has changed significantly. He just said, it’s really an optimistic statement, he said, “I can’t wait to see what America is going to be able to accomplish with all of their resources, with all of their talent instead of just half, with 50%.” I thought that was pretty cool.
Emilia: That is really neat. I like the way he thinks about things in general. It kind of applies to everything.
Jason: I know, he’s got such a good heart.
Emilia: Yeah.
Jason: That’s why I wish we could get him to spend some of his reading time on a subject other than financial statements.
Emilia: Okay. Great. Let’s see here, another quote we got. “The worst mistakes involve not understanding other people as well as you might.”
Jason: Wow. Think about that. He says, “The worst mistakes involve not understanding other people as well as you might.” To me, what that says is … he didn’t talk anything about financial statements there, he didn’t say anything … when he was talking about the worst mistakes, he was talking about relationships. It just reminds me that life is really all about relationships. You want to protect those relationships, you want to guard them, and you want to be careful with those relationships. Not understanding other people as well as you might. Yeah.
Emilia: Sorry, go ahead.
Jason: I just was thinking. One of the things that Stephen Covey says is, he says, “Seek for to understand, and not be understood.” Seek first to understand, and that’s really what Warren Buffett is saying here. It’s really take your time to understand other people. But what were you going to say?
Emilia: It’s just reminding me of something I’ve heard you say so many times, is that one great relationship can change your entire life.
Jason: Yes, absolutely.
Emilia: One important relationship.
Jason: One relationship can change everything, absolutely. Yeah.
Emilia: Yeah, I think that’s just a great way to think of life. And it applies to everything almost, yeah. It could be your finances, or your career, your family, anything. Yeah. Here we go, we’re going to move on. “The biggest thing to make money is time. You don’t have to be particularly smart.”
Jason: Yeah, he talks about this, especially to shareholders last year, 2017 to shareholders he said, “We made,” I think it’s like $65 billion, but he said, “It’s not because of anything we did,” it’s just they bought good companies at fair prices, and they’ve held on to them for a long time. That’s time is … you hear me say this all the time, time is the cure to the volatility of the stock market. I think he’s 87 years old now, so when you get to be 87 years old, and you’ve been investing and being wise, and intelligent, smart about it all these years, he’s just reaping the harvest. He planted seeds in the spring, and it’s fall season for him. He’s reaping the harvest. I’m sure he’s still out there planting seeds still. He’s looking for the opportunities for the next generation, 80-some years from now, when the team around him continue to manage that money for him.
Emilia: I wonder if he’ll live to be over 100. I told my husband the other day, I said, “You know what? I feel like I’m going to live to be more than 100.” I said, “I’m going to be a centenarian.” I don’t know, he started laughing at me, he said I will outlive him, but I don’t know if I’ll be 100. The next quote kind of talks about years too. This is Warren Buffett saying, “It takes 20 years to build a reputation and five minutes to lose it.”
Jason: Man, in this world that we live in where everything is shrinking all the time, you just have to conduct yourself in a way that is so above the board in every area of your life. You can’t separate what you do in your private life from what you do in your work life. It’s all interconnected. You are one person. You can ruin everything you’ve worked for. There’s this really sad story that I have, I won’t go into details. But there’s a gentleman that we worked with, retired, 65, really just loved his family. He made a big mistake. Big mistake. At 65 years old. I’m reminded, I mean, I’ve seen people slip into alcoholism, I’ve just seen all kinds of these mistakes. I’m reminded that it’s not just young people that make these mistakes, everybody can make these mistakes if you’re not really, really vigilant about protecting your mind, protecting your body, making sure you’re hanging around, and you’re surrounding yourself with the right people.
You want to be careful at every phase of your life. And you want to protect that reputation because you can ruin everything. You can have a family that you loved and cared for, and lose it all because of one mistake. Yeah, just be very, very cautious.
Emilia: That is good advice though. It kind of close into the next quote that we have here. “Prepare for any eventuality.”
Jason: This one, this again came from that movie, Becoming Warren Buffett. But, it was so important because that’s what retirement planning is all about, preparing for all these eventualities, understanding inflation and rate of return, and diversification, and asset allocation, and risk management, risk mitigation. All these different pieces go into the most important decision of somebody’s life. Prepare for any eventuality. Yeah. I just, I can’t overstate how important it is to just really make sure you’re thinking about this. I want to remind our listeners, Emilia, we’ve got a webinar coming up on retirement planning, so that we can show them our process for what a good retirement plan should look like. They could go to SoundRetirementPlanning.com, we show exactly how we show people how to optimize social security, year-by-year cash flow plan, stress test the plan, diversify across time.
We get into all of that. We talk about taxes, taxes are a huge subject right now, because taxes are on sale, and there’s an opportunity to capture. Prepare for any eventuality, be thinking about this thing, studying it. It’s an important part of having a good retirement.
Emilia: Great. Do we have time for a couple more?
Jason: Yes, just a couple more.
Emilia: Okay. This one always takes out to me, I hear a lot about this from my husband, who is, what should I say? New to investing, but he really is enjoying it. “Compound interest works.”
Jason: Compound, yeah, Albert Einstein said, “Compound in interest is the 8th wonder of the world.” When you really understand this idea, your money working for more money, and that’s the reason that you don’t have to work anymore. You need that money working for you, but in order for compounding to work you need to have time. Time is the one asset that people have less of as they’re transitioning through retirement. Interesting little side note, if you live to age 65, and you’re a man in the United States of America, you’ve lived 23,725 days. If you live to life expectancy, you have 6,205 days remaining beyond age 65. Think about that. 23,725 days to age 65, life expectancy, age 82, that’s 6,205 days.
The one asset that you have less and less of as you transition through retirement is time. You got to make sure time is on your side. Create a structure that’s going to support that. Remember what the purpose of the money is. For most people, they’re not … most people are not saying, “How can I leave as much money as possible to the next generation.” They’re saying, “I just don’t want ever become a burden a family physically or financially. And I want to know that I’m not going to run out of money before I run out of retirement.”
Emilia: Yeah. Family is very important to a lot of people.
Jason: I think we can do one more. One more.
Emilia: One more. All right. Let’s see here. “It’s a very strange thing love. If you try to give it out, you get more back. If you try to hold on to it, you lose it.”
Jason: That’s something from Warren Buffett. It’s a very strange thing love. If you try to give it out, you get more back. If you try to hold on to it, you lose it. That is what I think is really the greatest legacy. Being able to ask the two questions, who did you love? How did they know they were loved? If you can get down one right, I think you’re on track to really have a purposeful, a meaningful, a retirement with a lot of freedom, if you can figure out the answer to those two questions.
Emilia, this has been fun. Again, I want to just remind our listeners one last time. Our webinar coming up, I think it’s next week. They can sign up for it at SoundRetirementPlanning.com, over on the right-hand side, they’ll see a link for the webinar. I have tested it recently, and I see that it’s updated. It’s working. Until next week. Thank you for being here again.
Emilia: Thank you.
Announcer: Information and opinions expressed here are believed to be accurate and complete. For general information only and should not be construed as specific tax, legal or financial advice for any individual and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program. Parker Financial, its representatives or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company. Investing involves risk. Jason Parker is the president of Parker Financial, an independent fee based wealth management firm located at 9057 Washington Avenue Northwest, Silverdale Washington. For additional information call 1-800-514-5046 or visit us online at soundretirementplanning.com.
