Season 1, Episode 4: Who the f*ck is Warren Buffett?

Planting your investment tree, polyamory and money regrets (I've had a few)

This investing for beginners party is more interesting than you thought, right? Well, just wait til Sara hits you with advice normal people can use from fancy-pants investing guy Warren Buffett. Also, Caitlin asks who the hell he is and why he's so famous anyway.

And it wouldn't be a Women on the Verge of a Financial Breakthrough party if we didn't circle back to shame, regret and embarrassment about our (Caitlin's) financial past!

But if all of that doesn't entice you, there's a surprise ETHICAL NON-MONOGAMY plot twist in there when you least expect it! See? Finance is fun!

This week the one thing Women on the Verge of a Financial Breakthrough can do TODAY to take the first, or next, step towards building a strong financial future is super easy and will make you feel very smart.

Ask us your dumb investing and finance question on our contact page!

This episode was edited by Kim Shelton and Jes Rowe. Music by Bad Bad Hats and Devmo.

Transcripts for Episode 4: Who the f*ck is Warren Buffett?

Music intro by Bad Bad Hats

Caitlin Welcome to women on the verge of a financial breakthrough, the podcast where we're going to figure out finance one dumb question at a time. I'm Caitlin Meredith. I'm a mediator and a coach based in the Bay Area, and

Sara I'm Sara Glakas. I'm an investor, advisor and founder of Black Barn Financial and the Austin Women's Investing Group, which can be found on Meetup.

Caitlin So I first met Sara when I signed up for an Investing for Beginners class at UT. And I opened that door to the classroom thinking I would see like an old gray man named Walter in a three-piece suit standing in front of a chalkboard, and that I would barely be able to keep my eyes open for a whole class session. And instead, there was Sara sparkling and smart and funny, and seemed like somebody I'd want to be friends with. And I thought I was in the wrong classroom because it was so different than what I thought anything having to do with investing or finance might be. But I learned so much in that class, and after the class, Sara and I became friends, and now we're doing a podcast so I can bring that whole, very old gray Walter experience to everyone else. So welcome.

Music transition by Bad Bad Hats

Caitlin So I feel like those of us who never got a financial education in investment, we have to pretend we know a lot of stuff that we don't just to seem like grown ups. Part of that is not knowing who famous people are and knowing that they are famous and their names, but having no idea really who they are. So Sara get ready. I'm going to ask you about one of those who the fuck is Warren Buffett?

Sara Oh my gosh. Great question. I love talking about Warren Buffett.

Caitlin I know you do. But I want to tell you on this note card, I wrote down the three things I know about Warren Buffett. OK. All right. Hit me. You tell me if these are all right because I think I know them. He's very, very rich. Correct.  

Caitlin He lives in a modest ranch house, and Lincoln, Nebraska.

Sara Omaha is his home base. And I don't know if it's a modest ranch house. Honestly, that might be an urban legend. I don't know that one, but it's Omaha is where he's based

Caitlin Omaha, Nebraska was right. He writes a letter every year that all the finance people go nuts for.

Sara Yes. And I will say with Warren Buffett, why I think he's a good person to follow is. He has become. I mean, he's an expert at bridging that that gap between the world of Wall Street and finance in the world of the retail investor, right. The normal everyday investor. And he's always been able to do that right. He has this folksy wisdom that really resonates with individuals and that's what makes him. I mean, just like this mythological being in the financial world,

Caitlin but who is he? How is he somebody that we even know who he is?

Sara Great question. Sort of back way up. Who is Warren Buffett? He is the CEO of a company called Berkshire Hathaway. And so Berkshire Hathaway is a company that basically owns a bunch of other companies that a bunch of other stocks. It's a conglomerate that Warren Buffett runs. But he's been doing this since, I mean, in earnest, I think, since the 1950s. So over that period of time, he has really been out there, you know, trying to to grow this huge company basically from scratch. And I think part of the mythology is his longevity. He's maybe I think maybe he turned 90 this year, OK?

Caitlin I was going to say, how old is this guy, OK?

Sara And more than that, he again, he's able to walk this line. He is definitely a shrewd financial being. He can digest vast amounts of financial information. He can make really shrewd business calls. He's really famous for wanting to get the cheapest price for everything. And that resonates with a lot of normal, everyday people, right, who are shopping in the bargain bin and he's always taking the time. I feel like to talk to normal investors and to really help people figure out what they can do in their normal, everyday life. He's also like a huge proponent of the stock market, even as old as he is. He's still basically 100 percent stocks.

Caitlin But why does he need to be so rich? This is what I feel like. I'm conditioned to be very suspicious. You know, when you think about who who would be in his class right now, the people that I would even know about are like Jeff Bezos or Microsoft people. So, you know, they're selling products. So I sort of get it a little bit more. They have a business that got really popular and they made a lot of money off of it. He's just rich to be rich so he can show off his financial knowledge, especially if my myth is true and he lives in a small, modest ranch house. Despite the catalog, he doesn't come up as a showy of a person with the fifty thousand square foot estate. You know that Bill Gates has. So what is it about money? Is it just winning?

Sara I think for him, it's probably accumulating. He's an accumulator. It's like keeping score. But I don't think he's keeping score against other people. I think he's keeping score against himself. And to kind of go to like, why should one person have so much wealth, I mean, that's like probably beyond the scope of what I can speak to. But he and Bill Gates were kind of the first billionaires who started this giving pledge to give away half of their wealth during their lifetimes and are encouraging other billionaires to do that. So I think that Warren Buffett, I mean, it's his company. He has built his company in a way that 100 percent resonates with the way he thinks about business. I mean, he's living the dream, right? He created his own dream job, and I think he really enjoys doing it. So, you know, he's really good at something that is able to create vast amounts of wealth. So he has created vast amounts of wealth for himself. He has also committed himself to giving it away during his lifetime and not leaving it all to his kids. That's another famous story, as he's, you know, his kids will inherit. How does he put it? His kids will inherit enough money to do whatever they want, but not enough money to do nothing. It's something like that. Like, you know,

Caitlin OK, well, I can appreciate that. I think the disconnect for me, as you know, I'm just I have a little bit less of an investing success track record than Warren Buffett. But for me, and most people I know are focused on investing is so that we can still take, you know, a summer vacation after we retire. It's these very tangible things like how will I, you know, have my standard of living once I stop working and have a little perks, you know, get to buy my grandkids stuff or something that these future plans that are also tangible. And so it's hard to make that leap between just wanting a few extra thousand a year so I don't have to worry about money after I retire to having such a vast sum of money that you would never be able to spend it in one lifetime. And yet he and I are investors. The game is so different for him. It could be a game, whereas for me, it can't be a game, right?

Sara I think that's absolutely true. I mean, once you have a billion dollars, the stakes are much lower as to what you're investing in, right? If you're starting from nothing and trying to build it into something that will provide you security for the rest of your life, the rules for you are different. Absolutely. I mean, Warren Buffett is not important for people to know about in order to study his business decisions and replicate his investing success. I think Warren Buffett is a good person to read his writings again, because in those annual letters that you referenced, he talks regular people through what he thinks is in their best interest to create this wealth that gives them security. Right. So when the big things he's a proponent of is investing in the stock market, and he will lay out in his letters year after year after year after year after year, why he thinks every person should be investing in the stock market and he does tie it back to. This is how you can create wealth, too. You don't need a billion dollars, right, but for most of us regular investors who are trying to figure this out. I don't think we have a very clear idea as to what our options are, right, I think you and I have talked about this in the past, this idea of moving the needle. You know that regular investors, we start out with the high yield savings account. Yeah. Like and we just need to stop doing that right. We need to stop focusing on that.

Caitlin So what's an example of a concrete advice that he gives for a normal person like us? Well, you're I don't consider you a normal person.

Sara I’m a normal person.

Caitlin You’re normal in other ways. I don't consider you normal in your vast knowledge of finance and investing. But for instance, for someone like me, was actually a it would never occur to me to read one of those letters because I would just think, like the terms alone, the vocabulary he would use, I would have no way of even deciphering. So what's an example you can think of of some concrete advice he gave for someone like me?

Sara I mean, he's always talking about investing in stocks and investing in stocks for the long run. He every almost every letter he focuses on the wealth building, power of investing in stocks and specifically stocks in the U.S. and keeping, you know, he's, you know, if he's 90 and he's been investing since he was 14, he's been compounding his money for a long time. His advice is buy stocks, buy stocks where you understand what the company does, whose stocks you are buying. Don't chase fads. So it comes down to buy high quality companies where you understand their business model. That means you understand what they're buying and how much it costs, and how much in profits they can generate over time and then do it for a long time. OK. And that's his his whole story. And you know, when you know, if we start talking about compounding, you'll see like what that the impact of that decision making makes for a normal person. Over time, how does a normal person accumulate wealth over time? It's by focusing on those like tried and true pieces of advice that Warren Buffett gives in his letters all the time. And I will say, if you're reading his letter, skip the first part of the letter and skip to the end, because this part where he's talking to people is almost always at the end of the letter. There's a section

Caitlin so good to know, because that's the kind of thing where I'd be like, OK, this year I'm going to read Warren Buffett's letter and then four paragraphs and realize I have to read the whole thing over again because I haven't absorbed any of it. So I get to skip over all that part and then skip it

Sara because he's talking about like he's talking about like changes in accounting rules for the first 20 pages of the letter.

Caitlin OK, but Sara even the part where you say invest in the companies, you know, that's even intimidating to me because I'm like, I've never worked in that or I have no idea. So that means, you know, I look around me, I have an Apple computer, I have an iPhone, you know, so obviously, Apple plays a big part in my and I don't know anything about the company other than I buy their products. Is that what he means by knowing about a company or am I supposed to, like, figure out some sort of industry that I know nothing about? And just that will be what I research

Sara No, I think it's it's what your instinct is leading you toward, you know, people in the economy. If we vote with our dollars, we all have finite resources. Even Warren Buffett, right. But we certainly have finite resources. So when we're making our spending decisions, what are we spending money on? If you choose, if you're looking at two computers and you choose an apple over, you know something else, maybe that means that that Apple product is a good product that other people will want to buy, too. OK. I mean, that idea of what companies are able to create the goods and services that we want to buy. Yeah. Or that our kids want to buy that can lead you pretty far down this path of understanding the companies that you're buying. You don't have to know everything about Apple to understand that if you have an iPhone and it's time to get a new cell phone. Which one are you going to buy? If you're like, Oh, I love my iPhone, I would never buy anything else. Chances are pretty good. A lot of other people feel the same way. And so you understand how Apple makes money when people are in the stock world and this is like you can fall into this trap of taking tips from people, people telling you what the next thing is like, Oh, it's company x y z. You should invest in their stock. Yeah. You need to know what Company X Y Z does. But you don't need to know everything about the company. I think you just need to understand how a company makes money. It takes in money, it spends money. You want there to be money left over at the end right. You have a basic understanding of how that works.

Caitlin So that's very comforting. I like to think that I can just literally look around my surroundings. What have I used my earned money on and just start from there, those companies? But I also get worried, like I'm always hearing about companies I didn't even know that was a thing like the company that has the software that you know, Amazon uses for their inventory or that's a warehouse like these invisible companies that usual consumers just have no idea that exist or that do payroll or something that that don't necessarily have a product that I would ever see. And so I wonder, am I only exposed to like five percent of the companies that are in the stock market? And therefore, I have this tunnel vision for just the ones that I can see versus like the real moneymakers are the ones you have to know about those obscure industries to actually have the full breadth of the stock market.

Sara Oh, I love that. I mean, so the way you get around the blind spot is just owning all the stocks. Right, it's it's buying a mutual fund or an exchange traded fund that certainly Apple and Microsoft and Facebook and the companies that you see every day are going to be a huge part of that fund. But so will all those other little companies that make the components that go into those companies products or the companies in industries that you're not exposed to or sectors that you're not exposed to? So instead of picking one company and figuring out like, Oh, how does this company make money? You can you can just buy an exchange traded fund or a mutual fund that has a bunch of companies in it, and then you don't need to worry about it.

Caitlin Right? OK, so we need to talk about those. But before we do that, I want you to say, I know you have so many of your favorite Warren Buffett quotes. So I just feel like it would be remiss if we didn't let you share one of your favorite Warren Buffett quotes. Oh, awesome.

Sara I feel like I'm going to have to paraphrase because I don't know if I'm going to be able to recall it. Verbatim from memory, but I think of my very favorite Warren Buffett quote is someone is sitting in the shade today because they planted a tree 20 years ago.  

Caitlin And that's just like a dagger to my heart, Sara. Because essentially what you're saying is I should have done all this money stuff 20 years ago, and then I would be sitting under the shade of my like, amazing foresight for having invested. But that's not your point in saying that.

Sara Well, if you're planting trees now in 20 years, you'll be sitting in the shade. But I also know, Caitlin, that you planted some trees maybe not 20 years ago, but maybe 10 years ago. And so you're sitting in some shade today from trees you planted in the past.

Caitlin I didn't know that I was planting them, though, but yes, OK, I feel like what you gain out of it is whatever you do now, you'll benefit from in the future. And I feel so frustrated that it took me so long in my adult life to start paying attention to this stuff. And so it's hard just to not kick myself every time to be like, why didn't I just plant a tree then? And I know that's not the point for you.

Sara I mean, I feel like we should unpack that because I think that's a really common sentiment and maybe something that stops people from moving forward and investing right. Like, I think I've been doing this long enough that when people talk about their money regrets, I'm like, We don't have time to talk about your money regrets like, we're moving forward. Right? We're moving forward starting today, but people have money regrets and that stops them from making positive changes. I mean, so what do you think for people who have regrets about what they did in the past or wish they had started sooner? I mean, what? What would you say to them?

Caitlin Well, that will torture our children because we're so we will live that out in them. You know, the first babysitting job that my daughter gets like, we will be talking about a Roth IRA from the very beginning. So that will be how I make the amends. I was the person who, when I got my first job and had to fill out the form for whatever, and I just did it the quick as possible and every month that they would send me a statement, I would literally not open the envelope because it was so scary. You know what I didn't even have? Like, what bandwidth didn't I have this single person with the job, but it was just it had a force field on it. And so for me, when I think about money regrets, I think about those envelopes I didn't open. I think about not being curious during that time. And so it's frustrating, and I don't know why it then feels sort of like and now I should suffer for that because it was dry, even though now I can also see the infrastructure around. I never got a class in it. No one was ever coming out to be like, Hey, this applies to you too. It's not so hard to understand. It's fun actually to think about. So there's an aspect where I'm always looking for, and maybe we're just getting into my own unique masochism, which is a different podcast, I think. But that because of my guilt and shame and fear about being so maybe deliberately or not ignorant about it for so long that I'm looking for pieces more ammunition to tell myself how dumb I was not to do this earlier. And it feels like so much is on the line. Like, Really? Is this the difference between me? I mean, in my case, I love my work, so I want to do that forever so I'm not - it's not like then I won't be able to retire in my specific case because I like my job and I have a luxury of choosing. But like, will I not be able to take two vacations every year when I'm a grandma? Because will I not be as generous as my parents are able to be with my kid? Like, those are the implications that scare me. And so it freezes me then too. Yeah.

Sara Oh my gosh, that makes me so sad. But it totally is understandable. And I think that this is where, like my job as an advisor and certainly the meetings at the Austin Women's Investing Group, I think the benefit that I get is watching the stages that people go through, starting from the beginner stage. I don't know what I'm doing. I'm an idiot. Like, you know, this is never going to work to putting together a plan, either on their own or with the support of someone else. And then 10 years later, seeing the outcome of that plan. I imagine that there are so many people out there who can't see the difference in their life 10 or 15 or 20 years from now. And you don't get the benefit because we don't generally talk about this. You don't get the benefit of hearing other people's stories over and over and over again about, OK. Back in 2011, I just decided to do this other thing. And now, 10 years later, it worked like, high five. I don't know, maybe kind of settling into this. We're waiting for the market to crash. We're waiting to lose all of our money. You know, we're waiting for this really bad thing to happen. And we don't often hear the kind of boring stories of working long term financial plan. We only hear the get rich quick and then the like the downfall of someone you know, like brought on by hubris and greed. And this person ends up in jail like there are so many in-between stories of like, I didn't have my shit together and then I got it together, and now I actually feel pretty good about it.

Caitlin Yeah. And I think that that process for me was, so, I'm going to use the word empowering, even though kind of gives me the heebie jeebies because I remember after your class it was literally making the one phone call to Vanguard being like, Look, I'm freelance. I don't even know what I can have, but I am calling you to make that first step. And there was something very I just it turned something that I was avoiding and had this force field around fear and shame and snowballing like, I didn't do it then. So now it's going to be even worse. So I need to avoid it even more to, oh, here's this really nice person on the phone who is not treating me like an idiot or like, it's too late, lady. But I I thought of it like people who run in marathons and have already trained for years, and were in track and field in high school, like it seemed like their whole life was a runway to be investing and to have a solid financial future. And it's like I wasn't going to just join the New York City Marathon the next day, and that's what it felt like I'd have to do. Like, it's too late. I'm not in shape. I haven't trained. I don't even know how it works. And so learning through your class that like it is a marathon, but like it's your life and you just like, put your shoes on and join everyone else. And some people are walking and some are in strollers. Yeah, wherever you are, you can join. But really, you're exactly right. We don't hear those stories. So I'm hoping we get to tell some of those stories, and I feel like I'm in an in-between that there's, you know, since starting, I go through periods where I'm totally motivated and, you know, can learn the numbers and feel, get energy from it and excitement about feeling confident and other times that dread returns.

Sara I love that. I mean, I love the running to you because I feel like as I'm getting older, I'm identifying more and more with the runners who are out there on the street. And, you know, they just started three days ago and they are doing it. And I just want to cheer for all of those people who are doing it who aren't like in, you know, just the sports bra and like the little short running shorts, right? Like the the people that are out there and you're like, Oh my gosh, this person made this decision to get out and start running, and they are not in runner shape yet. But how do you get there? You get it. You get there by saying, I'm going to lace on these shoes. I'm so sore from yesterday. Yeah, I don't know how far I'm going to be able to go, but I'm doing it. I'm like going to develop that habit.

Caitlin And you're so right that meeting with, in our case, the Austin Women's Investing Group with a bunch of other women. But really, it could have just been one other woman from one other person who's also engaged in that process. And for me, it helped that there was a mixture of beginners like me and super advanced because also, as I started to learn more things, even if it was just the phone number for Vanguard that I could give to another person and say, Look, I've called already and they were super friendly and helpful. I mastered something and I could then teach it to someone else who is, you know, a beginner like I had been. And even that process was, I'm going to say it again, empowering.

Sara And that's what we're here for

Caitlin because, you know, I had a little bit of mastery and that gave me confidence to go a little bit more and a little bit more.

So after we stopped recording our conversation about Warren Buffett, Sara chose that time to tell me one of the more interesting details I've heard about a public figure, especially someone like Warren Buffett, who she had just described as this like Midwestern grandfather. So we're back on recording so we can try to repeat this conversation where Sara blew my mind. OK, so I can't remember how you said it, but it was just sort of like as an aside, like, Oh yeah, he has two wives. It's like,  come again.

Sara Yes, I think this is so interesting, right in in learning about Warren Buffett, most people just are really focused on his investing prowess, which of course, is very impressive, and it's actually seems to be the easiest thing to understand about him. But I love that for much of his life, he essentially had two very important women in his life his first wife, Susie, who he was married to for a long time, and they had three kids together. And at the same time, while he was married to Susie, she decided that she wanted to go on a separate path. She didn't want to live in Omaha, Nebraska. She wanted to live a more cosmopolitan life in San Francisco. So she left but didn't want to get divorced. She loved Warren, but she wanted someone to be able to take care of him. So she essentially arranged for someone who she knew and loved a woman named Astrid Menkes to start taking care of Warren. Well, Susie wasn't around. And so Astrid and Warren developed their own relationship very close relationship

Caitlin like chicken pot pie on Sunday, kind of relationship or toothbrush next to the sink kind of relationship.

Sara No one really know is like that level of detail. But, you know, Warren Buffett would go to different events with either Susie or Astrid. I think I read somewhere that they signed their Christmas cards, the three of them together. So this was not a hidden thing and there was no shame about it. Everybody was on the same page that he was married, but that he also had a very close romantic relationship with this other woman. And it seemed like the three of them cared about each other very deeply and had this essentially open relationship for, I mean, like decades. And only after Susie passed away from cancer and Warren was at her side two years later, he got married to Astrid, and they're still married.

Caitlin So this is like the craziest Bumble profile ever, like married couple seeking a third of the most wealthy. Yes, and his wife was like, I don't want to hear him chew anymore, but I want to stay married, just from a different state, and I can outsource the kind of caretaking that I'm not into anymore.

Sara I think it's so creative. It's such a creative solution to a problem that so many of us have.

Caitlin Thank you so much for sharing this. It's what makes finance interesting is finding about the romantic triangles. That's really what I'm in it for.

Sara Apparently, oh my god, keep my ear to the ground for more scandalous news in future podcasts.

Caitlin Thank you. Don't leave it out next time.

Music transition by Bad Bad Hats

Caitlin So Sara, what is one thing a woman on the verge can do today to take the next step on her financial journey?

Sara So since we're talking about Warren Buffett, I think one really easy thing to do for a woman who wants to learn more about especially investing in the stock market, a topic we're going to get to in future podcasts. But what you can do to start getting used to the way that people talk about investing and money, right, is go to Berkshire Hathaway's website. So Berkshire Hathaway is the company that Warren Buffett runs. And every year, he publishes a letter to shareholders. You can Google Warren Buffett, b u f f e t t letter to shareholders. And you will be directed right there. You can click on the 2020 letter to shareholders, which is what I'm looking at in front of me. And what Warren Buffett is really known for is talking in relatively plain English about very complicated financial topics. So, you know, you could read through the whole thing. It's only 14 pages long, or you can skip to the end. So in every letter to shareholders, Warren Buffett takes some time to talk directly to individual investors. And so in this 2020 letter, I see that kind of starting to happen on page nine, where he stops talking about the nitty gritty of Berkshire Hathaway, the company, and he starts kind of weaving in different narratives and his perspective on investing. And this is, you know, it comes out every year. A lot of people, you know, wait with bated breath for the letter to shareholders to drop, but you can go back at any point in time and just read through those and you really get a really clear picture of how Warren Buffett's investing mind works. And I think it's just a really good resource for regular people to have.

Caitlin And you don't have to worry about if you don't understand every fourth word or whatever. We're going to unpack a lot of the words that are be used in investing, talk and advice and whatever, but just to get a feel for how that vocabulary is used and even feel like you can just Google a document that has recommendations in it and read it and try to understand a little bit of it that even that is progress, right?

Sara Yeah. Just read it and let the words wash over you. We're going to come back to these concepts in the podcast and on your investing journey. This is for women on the verge, not, you know, women with a Ph.D. in finance. It's just getting started using that muscle of reading about financially related events and starting to digest them and pack them away for future use.

Caitlin Yeah, and you can bring a highlighter if you want, but you don't need to. A milkshake, Yes, but a highlighter and notepad? Not necessarily because you're not like taking this as actionable advice right now. But just like I'm entering in this conversation as a listener right now and I need to hear how they talk.

Sara Exactly - I love that an entry point into the conversation. It's bringing your chair up to the table, getting your seat ready, but you're not being asked to know every single thing that is in this letter. When you read it the first time,

Caitlin no one's going to call on you.

Sara No one is going to call on you. Exactly.

Caitlin OK, perfect. Thank you, Sara.

Music transition by Bad Bad Hats

Sara Hey, do you have any questions about finance or investing? Send them to us at our website womenontheverge.com

Caitlin Hey, so many thank yous to Kelly West, a woman on the verge in her own right who took the amazing photos for our album, art and website, helped with our website design, music, audio editing, cheerleading, mental health, everything. Emily Klein, surrogate, our stylist that did our hair and makeup for our photos from Lucy Skyrocket. Lauren Gross and Taylor Gross, who helped us with our graphic design

Sara and our music is by Bad Bad Hats and Devmo.

Caitlin This episode was edited by Kim Shelton and Jess Rowe.

Caitlin If your partner is making you ask for money, giving you an allowance, taking your money or not letting you know about or have access to family income, this could be economic abuse.

Sara Learn more at thehotline.org or call one 800 799 safe.

Caitlin So Sara because you're a financial professional, when you have to read a disclaimer for this podcast,

Sara I would actually really love it if you could read the disclaimer and your best legal voice.

Music outro by Devmo

Devmo The first thing you notice is that I'm covered in gold
The flick of the wrist it could turn a hot bitch cold
To get what you want in life girl you gotta be bold
Now Imma die rich