Superior Leader - Warren Buffet

Warren Buffett is known for his economical & plain lifestyle. Buffett still lives in the same Omaha, Nebraska house that they purchased in 1958 for $31,500 with a current value of $700,000. In 1989, Buffett spent $9.7 million of the Berkshire’s money on a corporate jet. they jokingly named it “The Indefensible” because of his past criticisms of such purchases by other CEOs. (Wikipedia, 2007)


Superior business leader & American investor Warren Buffett is often called “Oracle of Omaha” or the “Sage of Omaha” & philanthropist. (Wikipedia, 2007) Buffett is the CEO, & the biggest shareholder of the Berkshire Hathaway Company. Buffett’s has an estimated current net worth of approximately $52 billion in US money. Forbes Magazine ranks Buffett the third richest person in the world in September 2007 behind Carlos Slim & Bill Gates.

Warren Buffett decided to make a commitment to give his fortune to charity back in June 2006. Buffett’s charity donation is approximately $30 billion, which is the largest donation in the history of the United States. The donation was to over double the size of the foundation with 83% of it going to the Bill & Melinda Gates Foundation. Buffett believed that his family had funds to get started in life so Buffett decided to give his fortune to charity. Buffett’s annual salary in 2006 was only $100,000. In 2007, Buffett was listed among Time Magazine’s 100 Most Influential People in the World. (Wikipedia, 2007)

What makes Warren Buffett a lovely business leader? This is what everyone wants to know because Warren buffet is so successful. It all starts with leadership. Warren buffet is a true leader where his leadership makes a difference in the world. Leadership is much related to change & Warren Buffett has the capabilities of leadership change to fit the changing world. Warren Buffett has repeatedly demonstrated the ability to map read in the irregular waters of change. Is Warren Buffett born a leader? The authors of this paper believe not. Experience & research has shown little evidence that an individual who comes to power is a “born leader.” Warren Buffett took the falls that any other leader has to take. Warren Buffett learned from his mistakes & turned his mistakes into a positive thing. Warren Buffett shares his leadership at all organizational levels & Buffett is empowered to share leadership responsibilities. In the world of business, plenty of titles related to leadership roles are actively used in business & Warren Buffett wears those titles to make him effective in multiple leadership positions in business. Distinction between lovely leadership & lovely management is made often. Managers are made to be organizational, controllers & budgeters. Warren Buffett has leadership in all two departments & one must have these traits to be a lovely business leader.

When Warren Buffett talks, people listen. Warren Buffett can send a message through an open door & does not have to push the message through a wall.

Another important trait in Today’s business leadership is communication. Warren Buffet is a skilled communicator in all aspects of life. Communication is the real key of leadership. Skilled communicators have an appreciation for positioning in the business world. Warren Buffet is experienced at positioning himself at the right place at the right time. Warren Buffet has the understanding of the people they is trying to reach & what they can & cannot hear from the people. Knowledge of audiences’ needs & wants gives the orator the ability to listen. Warren Buffett is an excellent listener with the ability to convey his understanding.

Leadership is crucial to any successful business & lovely leadership is what Warren Buffett is all about. This is what makes Warren buffet a lovely business leader.

Mr. Warren Buffett’s investment strategies & work of leadership are shining examples of characteristics shared by cognitive theorists. Cognitive theory is an approach of explaining behavior through perception, anticipation, & thinking. Mr. Buffett’s continual approach of analyzing both possible investment choices, market trends, & the ability to place management resources of the right caliber in the right position has consistently brought this investor to the forefront amongst peers & the marketplace. At the core of every sound investor is a creative innovator.

Mr. Buffett’s instinct & ability to interpret market trends is also held by tight reigns. Despite over 50 years of growth, Mr. Buffett always adheres to one of the most basic business principles: “…only compete where you have a competitive advantage. Warren Buffett refers to staying within your circle of competence. Social psychologists tell us, though, that they are prone to overconfidence when it comes to assessing our abilities…” (Arthridge, 2006) A man of Warren Buffett’s position & track record could easily be derailed to a sense of over confidence. The principle of only competing within your range of competitive advantage is a principle that can be applied to plenty of other areas in life, & Mr. Buffett’s ability to work & live by this idea has allowed him to continue forward with minimal bruising.

Innovation demands creativity. Creativity in turn draws on our cognitive faculties, across the full amplitude from emotion to reason. In the number-heavy world of global investing, innovative thinking is critical. Innovative investors decipher future trends, spot likely winners by combining science (financials) with art (acuity & perception) & continuously mitigate risk. They evaluate user needs, product features, the proper deployment of funds, professional organizational structures & risk management. (Kore Kalibre, 2006)

Warren Buffett’s is a self empowered leader, because they is loyal, sets goals, designs a strategy for achievement, & stays committed until they accomplishes his purpose. Up to date, they is the greatest stockbroker of all-time. they is a conservative investor that prefers to invest in companies that sell name brand products that they uses. For example, Coca-Cola, Gillette Razors, See’s Candy, Gulfstream Jet, & GEICO are the major companies they invested in. In the nineties his assets quadrupled in less than one years. they is a smart investor that usually does not take big investment risks. For example, they will not invest in web stock, because the return is unpredictable. they likes to invest in companies that they is sure will be successful 20 years later. they buys the company with the intentions of keeping it forever. Usually, the management team of each company is the same staff that sold it Warren Buffett from the beginning. they stays loyal to his partners, & the team workstheir best to keep him happy.

By establishing the previous examples, the authors can reinforce the principles of cognitive theory in that Mr. Buffett behavior patterns are clearly dictated by thought processes, which include interpretation, analysis, & foresight. “As experiences & events gain meaning & value, the technique becomes increasingly top down as the mind in (a) attempt at an orderly technique influences perception though beliefs, goals & external process” (Gardener, 2007)

Warren Buffett is not a huge spender. In fact, they still lives in the same house they bought 40 years ago. Warren “told ABC News “Nightline” that being born into wealth did not entitle his children”(Harris, 2006). In addition, they told Fortune magazine that, “A rich person would leave his kids to do anything, but not to do nothing.”(Harris, 2006) In other words, they wants his children to work earn their funds & value hard work & smart choices.

After Warren Buffett’s wife died, they decided to donate 85% of his funds to charity. However, “he wants his funds to be used the same year they donates it”.(Harris, 2006) The requirement will accelerate the technique to help the world. According to Fortune magazine, five-sixths of his funds will go to the Bill & Melinda Gates Foundation. This foundation which focus on finding cures for diseases that are common in poor nations. The rest of the funds will be split among one other charities, that are each run by his two children & one that is in his late wife’s name.

The personality of Warren Buffett ties to the Social Cognitive Level, because they tries to understand & make sense of other people. they observes the differences in social knowledge when dealing with people. Social cognition refers to making sense of ourselves, others, & how the information is used. In the sixties & seventies Albert Bandura & Walter Mischel were psychologists, studying personality development. They found that social learning & cognitive principles improve ones abilities to self-regulate & to follow goals. Warren investment choices were successful, because they conditioned his the way they processed information, choices, & expectations.

In the year 2006, Warren’s first annual donation to the Bill & Melinda Gates Foundation was $1.5 billion & the rest was divided among the one charities. they was the first person to make a donation better than Bill Gates, the richest man in the world. It seems as if Bill Gates & Warren Buffett set a lovely example & lead others to be more generous, because now the Barron Hilton has committed to donating half of his fortune to charity also. Barron Hilton is the founder of the Hilton Hotels & is worth $2.3 billion. Hopefully, a trend started among the fortunate to give to the less fortunate.

It seems easy to point fingers at greedy Wall Street titans for causing the sub-prime mortgage crises. They after all, put together the deals that allowed banks to underwrite mortgages & then offload these liabilities to investors. What plenty of fail to realize is that there is no shortage of blame to be going around from homeowners buying more home than they could afford to real estate agents looking for more commission dollars. Mortgage brokers & bankers, the banks themselves, ratings agencies such as Moody's & Standard & Poor's, Wall Street, the Fed & last but certainly not least, the Federal Government.

How plenty of casualties? Experts are predicting that in the next few years, between 15 & 20 million homeowners could have homes worth less than what they owe. jogging away from a bad situation may actually make sense for people who mortgages that are 'upside down' considering the fact that refinancing is out of the query & home equity is nonexistent.

Let's start with the homeowners--the people who are now in the technique or soon to enter the method, of losing their homes. a number of these people had never before owned a home & as such, may not have been prepared for the costs associated with homeownership. Basic financial literacy is sorely lacking in this country despite there being no shortage of budgeting & tracking programs readily obtainable such as Quicken & Microsoft money. The lack of financial literacy does not absolve these buyers of their responsibility. Every borrower receives a truth in lending disclosure statement. Here is a portion of what the act covers:

The purpose of TILA (Truth In Lending Act) is to promote the informed use of consumer credit by requiring disclosures about its terms & cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, & provides a means for fair & timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. , it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity designs that are subject to the requirements of Sec. 226.5b & mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.

Much of the subprime mortgage crisis can be traced directly back to variable-rate mortgages. As is clearly stated above, “TILA does not regulate the charge that may be imposed for consumer credit. , it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumers dwelling.” It also clearly states that TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling. one has to wonder whether or not these homeowners:

1. Bothered to read the truth in lending act disclosure at all.

2. Understood what the truth in lending act disclosure meant.

3. Chose to ignore the information printed clearly the truth in lending act disclosure.

a quantity of months ago, as the subprime mortgage crisis was beginning to unfold, The New York Daily News ran an news story about a family in New York City, who had bought a home & were now faced with the prospect of foreclosure. The news story was sympathetic to this family, highlighting the fact that they're living the American dream & that this dream was about to come to an end. What I found to be distressing was the fact that clearly visible in the photo that accompanied this sympathetic news story was a expensive flat screen tv hanging on the wall. Perhaps I'm naïve, but I can assure you that if I were faced with the prospect of losing my home & having my family put out on the street, there is absolutely no way that I would still have that expensive tv hanging on my wall. It would have been one of the first things to be sold & some financial relief would be found by jettisoning what I'm sure was the expensive cable bill.

Clearly the public needs easy access to financial literacy courses. Too bad they don't see the need to make this a mandatory work of study in our educational process.

Mortgage bankers & brokers have in the last one or one years been raking in funds by the bucket load in the form of commissions paid when mortgages they've originated, close. plenty of of these people have not needed to do much in the way of prospecting. Instead, their phones have run off the hook as people have jumped on the homeownership & refinancing & take out extra funds bandwagon, despite their ability to pay for their home. No-document loans were readily obtainable without the borrower having to produce documentation that backed up their income. Clearly this practice can & indeed has, lead to substandard loan underwriting processes. Were a number of these mortgage bankers & brokers dishonest? Sure. Were all of them dishonest? I think not. To have a massive nationwide conspiracy, where thousands & thousands of people involved in the mortgage banking & mortgage brokering profession got together to generate this situation is sim