Buffett's 1999 Speech:Do the Things That Excite Us

In 1999, Warren Buffett shared his life experiences at the Nebraska Educational Forum. His words, like his investment strategies, were simple yet profound, striking directly at the heart.

Buffett emphasized the importance of self-worth, pointing out that our greatest financial asset is not stocks or bonds, but the future value we can create through relentless effort. He reminded us that to realize this value, we must focus on two key factors: education and habits. Education opens the door to knowledge, while habits shape our behavior. He also believed that integrity is the cornerstone of wisdom and diligence, determining how far we can go in life.

Next, Buffett spoke about the importance of financial discipline. He warned that credit card debt is a dangerous trap, one that will erode our financial health with high interest rates. If you can’t afford it, don’t buy it. This is a simple yet effective financial principle that demands responsibility for our spending behavior. When discussing investments, Mr. Buffett also emphasized the importance of discipline. He pointed out that most people fail in investing because they lack discipline and are easily swayed by market emotions. He advised us to look for investment opportunities that can grow in value over the long term, just as we would look for businesses with good economic prospects.

He also encouraged us to stay passionate and pursue the things that excite us. Using his own experiences as an example, he talked about how, with a good education and a supportive family background, he pursued a career he loved and realized the vision of each generation living better than the last.

The Greatest Financial Asset is the Value You Create Through Your Own Efforts

Test, one million, two million, three million. I want to talk to you about your financial future, hoping that these numbers will be relevant to each of you in the future.

I’d like to start with a question, rather than just talking for a few minutes and then having a Q&A because I want to discuss the points you care about, but I want you to think about this question first: “If you walked out of here today, and I offered to buy 10% of your future income, I’d give you a check today. But from this day forward, you would owe me 10% of your income. How much would you charge me?”

I want to buy 10% of your income, and by the way, I might choose the lowest bidder, so be careful.

If you think about this, I’d give you a check today, and you could do anything you want with the money, but from today onward, you’d have to give me 10% of your income. I think it would be foolish for anyone to ask for less than $50,000, even though it will take a few years before you start earning money, so I would go a few years without making anything, but after that, I’d start making money from your income.

If you think it through, most of you would ask for far more than that, and you’d be right. Fortunately, I haven’t made that deal with anyone, so I haven’t taken 10% from anyone. But I think $50,000 is the minimum, and if you believe that 10% is worth $50,000 today, that means you’re worth $500,000 today because 10% of you is worth $50,000 in cash.

This is your greatest financial asset; it’s far more important than whether you decide to buy stocks, bonds, mutual funds, or pick stocks on your own. Your greatest financial asset right now, without question, is the value you create over the years through your own efforts. So, if you’re focusing on your financial future, you should focus on yourself because whether your 10% is worth $50,000, $1 million, or $3 million depends largely on your performance over the coming years.

Everyone here has the intelligence and energy to achieve great success in life; the key is how you use them. If you have a 200-horsepower engine, will you be able to realize the full 200 horsepower potential, or will you only get 100 horsepower or 50 horsepower?

Two things can prevent you from reaching your full potential. One is a lack of education, but that probably won’t happen to most of you here. If you lack education, if you don’t have access to a decent education, then no matter how much potential you have, you can’t fully realize it. The second thing, equally important, is your habits—how you treat yourself.

You Can’t Change Your IQ, But You Can Always Maintain Integrity

When I hire employees, we look for three qualities: integrity, intelligence, and energy. But if they don’t have the first quality, integrity, the other two will kill you. If you hire someone without integrity, you want them to be dumb and lazy, right? The last thing you want is someone who is smart and hardworking but lacks integrity. Intelligence and energy only work if they’re combined with integrity. But you can decide on that. You can’t change your IQ, how far you can throw, how high you can jump, or the color of your hair, but you can choose to be trusted by anyone.

If you combine integrity with intelligence and energy, you will achieve extraordinary results; if you don’t combine them, most of your potential will go untapped.

I’ll give you a simple test to think about the habits you want to develop because you can have any habits you want. You can be lazy, you can be punctual, you can be late, you can be honest, or you can be a cheater. These are all choices you make, no one else decides for you.

I suggest you play a little game with me. Think about the person you most want to be, maybe a peer, maybe someone a bit older, and pick out the person you admire most, someone you would want to trade places with, and write down why you admire them on a piece of paper. Then think about the person you would least want to trade places with, the person you find most despicable, and write down why you despise them. That person who you find very repulsive—write those reasons on the other side of the paper.

Then, look at that paper, and you’ll find that the left side lists the qualities you admire in others—cheerfulness, generosity, etc.—and you’ll find that these qualities are ones you can have yourself. It’s very simple; you just have to work to develop these habits, and if you establish these habits early, they will stay with you for life.

On the other hand, you’ll find the qualities that make people repulsive: selfishness, nastiness, arrogance—qualities that no one wants to have. If you find you have these flaws, you can get rid of them early on. So, my advice is to write down a list of admirable qualities and a list of loathsome habits, then decide which admirable qualities you want to develop. If you can do this while you’re young, these habits will stay with you for life.

If you do this exercise when you’re in your 50s or 60s, it might not be as effective because your habits will be too deeply ingrained, but if you start early, your behavior will become habits. If you do this exercise again in a few years, you’ll find that the person you admire most is yourself, which might be a bit dangerous in some cases, but it’s not a bad thing. You want to become the person you like, not someone you don’t like. So, establish these habits early, and you’re unlikely to go wrong.

Avoid Accumulating Large Credit Card Debt

I’ll give you another piece of advice, which is an extension of the previous one, and then we’ll move to the Q&A.

On the financial side, I’d say, avoid using credit cards, just forget about them altogether. We have some businesses that issue credit cards, and the American public loves credit cards, but if you have credit card debt, you will pay 18% or 20% interest, and you can’t improve your financial situation with such high-interest loans. If you can lend money at 18% or 20%, you can make a lot of money.

I was fortunate enough to have saved about $10,000 when I graduated, and that $10,000 turned into millions because once you have a family and all the expenses, the costs will keep rolling in. But that was my working capital because I always stayed one step ahead. If you owe $10,000 at some point and pay 18% or 20% interest, you’ll never get out of the hole.

One of my partners, Charlie, used to say, he just wanted to know where he would die, so he would never go there. In finance, it’s the same—you want to know ahead of time where you don’t want to go and avoid going there.

I get about a dozen letters a day from people who are in serious trouble, and they fall into two main categories. One is that some people have encountered health problems, they or their family members have suffered some catastrophic illness, which is a terrible thing for any family, and they’ve accumulated bills they can’t pay—this is something only society can solve; it’s pure misfortune.

Another reason is the accumulation of credit card debt. They face bankruptcy or have gone bankrupt, now owing a large sum of money. They can’t even pay the interest, let alone the principal. Half of the letters I receive are from people in this situation, and this problem is avoidable. Catastrophic illness is unavoidable, but credit card debt is self-inflicted. It’s easier to avoid trouble than to get out of it. If you accumulate large amounts of credit card debt, you’re likely to remain in financial trouble for life.

If you can get ahead, even if only by a small amount, and let money roll in through investments, my advice is this: if you can’t afford it, don’t buy it. Purchase things within a reasonable financial range.

Do What Excites You

Question: What advice would you give to those who don’t necessarily enter high-paying fields, like performing arts or music? How do you suggest we keep up financially with others?

Buffett: Well, the market system does pay more in some activities, possibly disproportionate to their importance. Take teaching, for example. Teachers don’t get paid a lot, but what could be more important than education? You need to care about things like your child’s teacher, your accountant, or who the heavyweight champion of the world is, but the salaries in education aren’t high.

For many people, it’s a fundamental choice: do you follow the career you love, or do you pursue more money? Generally, I think it’s worth following your interests. I have a hard time finding anyone, at my age, who says they loved their work and found it very valuable but regret not making a lot of money.

I’ve never met someone who told me they wished they had gone into a field just for the money, even if they didn’t enjoy the work or find it fulfilling. So, I think you won’t encounter that situation. I would advise you to do whatever excites you.

It might be more lucrative than you think unless you develop bad habits along the way. Almost everyone in America can make enough money and live well. Living well in this country is actually very good. I was happy when I had $10,000, and I still live in the house I bought 41 years ago. I loved that house then, and I love it now.

If you have a reasonable job, you’ll eat at McDonald’s, and so will I. So, we’re equal in that aspect. In fact, I hope it’s Dairy Queen—maybe you’ll meet me there, and we can order anything from the menu because we can both afford it. You’ll wear clothes similar to mine; my suits may be more expensive, but they’ll still look cheap, and we’ll look pretty much the same.

We’ll live in similar houses. I still live in the house I bought 41 years ago; it’s warm in winter, cool in summer, and very comfortable. You’ll live in a similar house, and having 50 rooms or guest rooms doesn’t make much difference—it might just add more headaches, like dealing with gardeners. I’ve visited homes that may be worth 200 times my house, but I wouldn’t be happier there; in fact, I’d be less happy because of all the things to worry about, like servants and management issues.

We’ll drive similar cars. You might drive a better car than mine; I’ve had mine for eight years now. I don’t know what it’s worth, but it gets me around, and I’m satisfied.

We’ll watch the same TV, use similar computers. The only difference is in how we travel long distances—I’ll fly more comfortably, not on Southwest Airlines, and that’s the only real difference.

Other than that, I do what I love every day, and I hope you do too. I work with pleasant people, and I hope you do too. There are 24 hours in a day, and that’s where we spend our time. So, the difference between huge wealth and a decent income is minimal in real terms. Sacrificing what you love and your principles for great wealth is a huge mistake.

Believe You Are Lucky

Question: Is your success more due to your own efforts or the help and guidance of others?

Buffett: I’ve been very fortunate in life. If you tell me who your heroes are, I can tell you what your future is like. I had the right heroes, and I’ve been very lucky in life. My heroes never let me down, starting with my father and including some business heroes. So, I had great teachers, some formal and some informal, who taught me through intuition or example.

Without them, my life would certainly have been different. If I had been born somewhere else, my life would be completely different. I was born in 1930, and at that time, the odds of being born in the United States were 1 in 50, so I won the 50:1 lottery by being born here. If I were born in Afghanistan or Peru, I might have been a mess.

I won the lottery the day I was born because I was born in this country, and so were you. The odds of your birth were probably 40:1. It’s unlikely you were born in the United States. Your odds of being born here were five times higher than being born in China and four to five times higher than being born in India or other places where it’s harder to fulfill your potential.

We all won the lottery; it’s pure luck. I was also fortunate to be born in this era. I’m good at capital allocation, but it wasn’t always this way in other societies or many years ago. My friend Bill Gates says if I were born thousands of years ago, I would have been some animal’s lunch because I can’t run fast or climb trees. These talents aren’t needed now but were at some point in history. By the way, Bill would also be an animal’s breakfast; he doesn’t run fast either.

Anyway, we are lucky. Imagine if you were born a few hundred years ago with the same talents—how far would those talents take you? The average person today lives much better than the richest person 100 or 150 years ago.

I was lucky to have great parents, to grow up in Omaha, and to have a good public education system that laid the foundation for me. Even though I strayed a few times, their education still helped me, especially Rose Hill Elementary. Part of the reason I had such an education was that women faced extreme discrimination at that time. Women could be teachers, secretaries, or nurses, and that was about it, so half of the country’s talent was restricted to a few professions.

I’ve been lucky all my life. Is what I’ve done more important than a good teacher or nurse? I think that’s debatable. In a market economy like the United States, there are huge rewards, but that’s accidental and has nothing to do with any innate abilities of mine.

High Tech is Disrupting the World

Question: Technology has played a significant role in driving the world economy. What are your predictions for the future of the tech industry? What is its future role in the world and U.S. economies?

Buffett: There’s no doubt it’s disrupting the world; it has already started, but it’s just the beginning, and it’s developing very rapidly.

On July 15, 1991, I met Bill Gates. He tried to teach me about high tech, but it was less effective than teaching a monkey. I really didn’t understand much, but he’s a good teacher. He said he had a model of the world in his mind that viewed time and distance as very limited factors, but those are no longer constraints. Also, the cost of communicating or spreading information worldwide would become almost zero. This was a revolutionary idea at the time, but now it’s very common. In just eight years, it has grown explosively.

High tech, information technology, whatever you call it, is changing the world and will continue to change it in a very big way. Yesterday, we announced the acquisition of a furniture retailer in the Boston area, and I had to consider the impact of the internet on furniture retail—these changes will be huge.

Yesterday, I played bridge with people all over the country, but in reality, I just needed to sit in front of my computer with some popcorn, wearing khakis and a sweater, and I could play bridge with anyone in the world within 30 seconds, at almost no cost. This is completely different from organizing a bridge game with four people in Omaha, where someone wants to play golf, and someone else wants to watch baseball. Technology has changed a lot of things.

We’re very fortunate that America is leading the world in this field. It’s hard to say who’s in second place. Fifteen years ago, this country had an inferiority complex, with people worried that the Germans and Japanese would own everything, making steel, cars, and televisions, while we would just make hamburgers. This situation has changed dramatically in just 15 years, largely due to the information revolution.

This is the most important industry in the world, and America’s position in it is incredible—we’ve been driving it forward. So, I think this bodes well for the world’s future, and it also bodes well for this country’s future.

Save Some Money and Be Prepared When Opportunities Arise

Question: How can young people secure their financial future?

Buffett: It’s not complicated—first and foremost, fully utilize your talents. Whether your income over the next 20 years is X, 2X, or 3X will depend on how you use your existing talents, not on how much talent you have. Your best financial future lies in your abilities and how you maximize them—these are things that cannot be taken away from you or taxed.

What surprises me is that people who perform well in business stand out immediately. When I graduated, I thought everyone would perform that way, but that’s not the case. Most people sleepwalk through life. If you don’t, you will stand out. Therefore, the biggest factor in your financial future is yourself.

Beyond that, staying ahead rather than falling behind is key—saving, no matter how you do it. I delivered newspapers, worked in a department store, sold golf balls, and operated a pinball machine business. I did many things that allowed me to accumulate about $10,000 by the time I graduated. Although $10,000 isn’t as valuable now as it was then, any savings will put you ahead rather than behind, and that’s incredibly important.

If you’re in a race with a group of people, being 10 to 15 yards ahead at the starting gun rather than 10 to 15 yards behind can make a huge difference in the outcome. Therefore, having some net resources—whether in stocks or bonds—isn’t crucial, but not having any debt when you graduate is a huge advantage. By delivering newspapers or working part-time, you can save some money for yourself so that when opportunities arise, you’re ready.

When you enter the workforce, if you’re starting ahead rather than behind, then you must avoid getting into a situation where you’re paying back loans for a bunch of stuff you bought, especially when you’re paying 20% interest on it.

Don’t Incur Huge Debts for Business Education

Question: With the rising cost of education, how should students deal with debt after graduation?

Buffett: That’s a tough question. I think I would pay off the debt as quickly as possible and incur as little debt as possible before going to school. My experience in the business world tells me that there isn’t much difference between expensive business education and much cheaper education.

I completed my final year of college at the University of Nebraska-Lincoln after spending two years at Wharton. What I learned at the University of Nebraska was just as much as what I learned at Wharton—not to say Wharton wasn’t good, but I had great professors at Nebraska. Therefore, I wouldn’t assume there’s a huge difference between getting an education in-state for a few thousand dollars versus paying a lot more elsewhere. A large part of education is self-learning, although you need someone to guide you in the right direction.

Andrew Carnegie made a significant contribution to this country’s libraries, and I spent a lot of time in them. Now, with the internet, everything has become easier. Therefore, access to information has become more convenient, and you don’t need to spend $30,000 to $35,000 a year to attend some prestigious school to get an education.

If you’re studying accounting (which may be the most important subject in business), I believe the accounting knowledge you gain at the University of Nebraska is the same as at Harvard. I wouldn’t go into huge debt for business education. Of course, if you’re in a field like medicine that requires significant financial investment, incurring debt may be unavoidable, but you’ll have to decide for yourself. I would try to minimize debt and plan to deal with it within five years after graduation, otherwise, I would think twice before proceeding.

Participating in Community Activities Is a Valuable Experience

Question: Do you have any advice for establishing a non-profit organization?

Buffett: I’ve generally avoided establishing non-profit organizations. However, it depends on what you want to achieve. For example, if it’s a hospital, it’s different. Establishing a non-profit requires experienced people who are involved, but it largely depends on your goal.

Question: I know you’re very active in community activities, and I’d like to know how important you think that is for personal life and why?

Buffett: I wouldn’t say I’m very active in community activities. I’ve done some things, but not a lot. Your role model in Omaha for community involvement should be Walter Scott, who’s much more involved than I am, and his predecessor, Peter Kiewit, was as well.

My problem is that I love what I do so much that it takes up most of my time, but my family is very active in various community activities, especially my children. I believe you end up doing what you want to do. Anyone who gets involved in community activities will find it a very valuable experience. It’s always fun to be part of building something, and you will enjoy it.

If you’re interested in politics, find a political cause or politician you agree with and get involved—you’ll find it very fulfilling. So, my advice is to follow your instincts.

Each Generation Lives Better Than the Previous One

Question: What do you think is the biggest economic issue we will face in the future?

Buffett: I don’t think you’ll face any massive economic problems. I believe you’ll live in a society with an average standard of living significantly higher than that of the previous generation or two. This is due to the history of this country—it’s an extraordinary country. Just think, we only have 4.5% of the world’s population, but we create 53% of the world’s market value in publicly traded companies.

This country has always done well, like in the stock market, where you buy a good business that even a fool can run because sooner or later, one will. That seems to be the history of this country, where we’ve had many issues, but each generation lives better than the previous one. This is because savings enable people to create new tools and do better, and because our environment allows people to fulfill their potential better.

Of course, the system isn’t perfect—actually, it’s far from perfect—but it’s better than anywhere else. This country doesn’t have an official controlling large companies, but people like Jack Welch running them, which has greatly increased productivity. Productivity is why living standards rise, so any system that allows people like Jack Welch to run companies has a huge advantage.

Therefore, I believe you have a bright future ahead of you—you won’t face war, and you have a better future in terms of material rewards than any generation in history. I wish I could trade places with you, but maybe a few people would be willing to trade places with me.

I Like Finding Businesses with Good Economic Prospects

Question: I’d like to know if you or Mr. Gates are concerned about Y2K’s impact on the economy or the stock market?

Buffett: I’m glad you mentioned someone else because I’m the last person to understand Y2K. I don’t know why this microphone works, I don’t know why the lights are on, and when I turn on the TV, I just hope for the best—this is all beyond my understanding. But I will say that most of the smartest people I know believe this will be a non-event in the United States. I can’t speak for the rest of the world, but I think you’ll wake up on January 1 and find that the world hasn’t changed.

We have a company called Executive Jet, and we have about 1,400 to 1,500 customers who co-own planes with us. We have 160 planes flying, and what I’m interested in is how many people have booked planes for 12:01 AM on January 1. I personally have no worries about flying on January 1—I hope to be preparing to watch the Huskers game by then.

Question: How do you decide on projects to invest your time and money in?

Buffett: I like finding businesses with good economic prospects. So, what are good economic prospects? Good economic prospects mean the business has some sort of moat that makes its product, service, or location more attractive than similar ones.

For the past 30 to 40 years, the best-selling candy bar has been Snickers. People don’t randomly try different brands when buying candy because they’re putting something in their mouth for which they’re paying 50 cents or more—they’re not going to switch brands easily.

We like businesses where we can predict where they will be in 10 to 15 years. I don’t know what technology companies will look like in 10 to 15 years, but I know Snickers will still be popular in 10 to 15 years. For example, there won’t be much innovation in chewing gum, and the internet won’t stop people from chewing gum. We look for products with sustainable competitive advantages, making them unique in the market. We also look for honest and capable managers. Finding honest and capable people is easier than finding businesses that will perform well over the long term—some businesses that seem to have long-term prospects eventually disappear.

We don’t need to find many such businesses—finding one a year is great. You don’t need hundreds of great investment targets; you just need a few. Discipline, not IQ, is the most important thing. Investing doesn’t require an IQ of 150—thank God—it doesn’t require 140, it doesn’t require 135, maybe 115, but you need discipline.

You must wait for the right opportunity before taking action because there’s no penalty for inaction in investing. In baseball, if you only like pitches that are two inches above the waist, the pitcher can throw a lower pitch, and you’ll be struck out because you can’t find a pitch you like. But in investing, you can always wait for the right opportunity.

If the newspaper says General Motors is at $68, General Electric at $115, General Dynamics at $63, and you don’t like those prices, you can simply pass. You can wait every day with no penalty for inaction. When you decide to buy, if you make a mistake, it’s a misstep. But it’s a wonderful game because there’s no penalty for inaction. You can wait a month, six months, a year, or even two or three years until you really know what you’re doing, until you like the price and the management team, and then take action. You only need a few of these opportunities in your lifetime.

When we choose businesses, we stick to areas we understand. There might be many good investment opportunities that I don’t understand, like what will happen with cocoa beans next year or the price of oil, but I don’t need to know these things. I only need to know what I know, to understand my circle of competence. If I can only assess 5% of the businesses in the world, that’s fine; I’ll look for opportunities within that 5%.

Most people get into trouble in investing because they lack discipline. They hear about others making money, get tempted, and think they’re smarter than their neighbor. Why did the neighbor make money trading stocks on the internet and buy a new car, but they can’t? The answer is: In the long run, you’ll lose money if you trade stocks frequently and can’t maintain discipline.

Every time you buy something, you should be able to write down on a sheet of paper why you’re buying it, like, ‘I’m buying General Motors at $65, I’m buying General Electric at $150 because…’ You should write down the reasons. If you can’t fill the page, if it’s just because someone told you at a cocktail party last night, that’s not good enough; or if it’s because a broker told you, that’s not good enough either.

You must have a sound reason for investing. The same logic applies when buying a farm or an apartment. If you buy a farm at $1,000 per acre, you would say, ‘because I think I can make $60 per acre,’ which is reasonable. If corn sells at a certain price, if soybeans sell at a certain price, if the yield reaches a certain level, you can calculate the corresponding income. The principle is the same as buying a business.

When you buy a stock, you’re actually buying a small part of a business. This is the most important point in investing. When you buy a stock, you’re actually buying a small part of a business. If you buy at a price that makes sense for the whole business, you’ll make money; if not, you won’t make money in the long run.

Moving in the Right Direction

Question: Today, society’s moral standards will eventually affect our business behavior. How do you think this will impact the growth of American youth?

Buffett: I find it difficult to quantify the changes in moral standards over time. No matter when or where, we can find both significant flaws and strengths in social behavior. On the whole, I believe we have made progress in institutionalized moral standards in this country. For example, the abolition of slavery, the fact that women didn’t have the right to vote a century ago and faced inequality in inheritance rights, the establishment of income tax, and so on, all show that we have made progress in moral standards.

Of course, we still have a long way to go, but I believe we are moving in the right direction. If society becomes more moral 40 years from now, it will be beneficial for everyone here. The progress made during the Civil Rights Movement in America is an example. Television dramatized the events, bringing them to the attention of people far from the scene. Although progress may be slow, we are moving in the right direction.

Question: Given that the stock market is currently at a high, is it wise to get involved now, or should we wait for the market to pull back before entering?

Buffett: I can’t tell you whether you should buy stocks now, but I believe that saving is important. If you’re interested in stocks, you can try buying some. Paper trading and actual trading are different experiences, and losing money will help you understand yourself better. I bought my first stock when I was 11 years old. I bought three shares of Cities Service at $38, and later it dropped to $27—a memory that remains vivid to this day.

Through trial and error, I struggled in the stock market for many years until I read Benjamin Graham’s The Intelligent Investor at age 19, which had a profound impact on me. My past experiences prepared me to embrace Graham’s philosophy, which also changed my financial life.