Bill Gates: Three Things I’ve Learned From Warren Buffett (From Bill Gates Blog)

June 12, 2013

I’m looking forward to sharing posts from time to time about things I’ve learned in my career at Microsoft and the Gates Foundation. (I also post frequently on my blog.)

 

Last month, I went to Omaha for the annual Berkshire Hathaway shareholders meeting. It’s always a lot of fun, and not just because of the ping-pong matches and the newspaper-throwing contest I have with Warren Buffett. It’s also fun because I get to learn from Warren and gain insight into how he thinks.

 

Here are three things I’ve learned from Warren over the years:

 

1. It’s not just about investing.

The first thing people learn from Warren, of course, is how to think about investing. That’s natural, given his amazing track record. Unfortunately, that’s where a lot of people stop, and they miss out on the fact that he has a whole framework for business thinking that is very powerful. For example, he talks about looking for a company’s moat—its competitive advantage—and whether the moat is shrinking or growing. He says a shareholder has to act as if he owns the entire business, looking at the future profit stream and deciding what it’s worth. And you have to be willing to ignore the market rather than follow it, because you want to take advantage of the market’s mistakes—the companies that have been underpriced.

I have to admit, when I first met Warren, the fact that he had this framework was a real surprise to me. I met him at a dinner my mother had put together. On my way there, I thought, “Why would I want to meet this guy who picks stocks?” I thought he just used various market-related things—like volume, or how the price had changed over time—to make his decisions. But when we started talking that day, he didn’t ask me about any of those things. Instead he started asking big questions about the fundamentals of our business. “Why can’t IBM do what Microsoft does? Why has Microsoft been so profitable?” That’s when I realized he thought about business in a much more profound way than I’d given him credit for.

 

2. Use your platform.

 

A lot of business leaders write letters to their shareholders, but Warren is justly famous for his. Partly that’s because his natural good humor shines through. Partly it’s because people think it will help them invest better (and they’re right). But it’s also because he’s been willing to speak frankly and criticize things like stock options and financial derivatives. He’s not afraid to take positions, like his stand on raising taxes on the rich, that run counter to his self-interest. Warren inspired me to start writing my own annual letter about the foundation’s work. I still have a ways to go before mine is as good as Warren’s, but it’s been helpful to sit down once a year and explain the results we’re seeing, both good and bad.

 

3. Know how valuable your time is.

 

No matter how much money you have, you can’t buy more time. There are only 24 hours in everyone’s day. Warren has a keen sense of this. He doesn’t let his calendar get filled up with useless meetings. On the other hand, he’s very generous with his time for the people he trusts. He gives his close advisers at Berkshire his phone number, and they can just call him up and he’ll answer the pone.

 

Although Warren makes a point of meeting with dozens of university classes every year, not many people get to ask him for advice on a regular basis. I feel very lucky in that regard: The dialogue has been invaluable to me, and not only at Microsoft. When Melinda and I started our foundation, I turned to him for advice. We talked a lot about the idea that philanthropy could be just as impactful in its own way as software had been. It turns out that Warren’s brilliant way of looking at the world is just as useful in attacking poverty and disease as it is in building a business. He’s one of a kind.

 

 

El Fraude está ahogando a la política social de Deshabilitados....(BusinessWeek)

Courts

A Crackdown on Disability Fraud Highlights Program’s Troubles

By John Tozzi                                                                      August 22, 2013

 

Federal authorities arrested 68 people in Puerto Rico on Wednesday in a two-year probe into fraudulent disability claims, according to the inspector general for the U.S. Social Security Administration. Prosecutors charged three doctors and a former Social Security employee who they say helped people make false claims that they were too sick or injured to work. In exchange, the suspects allegedly got cuts of disability payments, ranging from $150 to $6,000. Dozens of people who received the payments were also charged.

The arrests follow a 2011 Wall Street Journal investigation into unusual disability claims in Puerto Rico, and the case highlights a growing problem for the federal government: ballooning payments under a program with notoriously squishy standards for what constitutes a disability.

Here’s a look at the increased number of federal disability payments, which topped $190 billion in 2011:

 

 

What’s driven this dramatic growth of payments, which now go to more than 14 million Americans? As NPR reported earlier this year in a deep look at the program, disability insurance has become a stealth safety net for people unable to find decent jobs:

 

 

 

 

Part of the rise in the number of people on disability is simply driven by the fact that the workforce is getting older, and older people tend to have more health problems. But disability has also become a de facto welfare program for people without a lot of education or job skills. … People who leave the workforce and go on disability qualify for Medicare, the government health care program that also covers the elderly. They also get disability payments from the government of about $13,000 a year. This isn’t great. But if your alternative is a minimum wage job that will pay you at most $15,000 a year, and probably does not include health insurance, disability may be a better option.

The system invites abuse, and the government knows it. “We designated federal disability programs as high risk, in part because the programs do not reflect a modern concept of disability,” a U.S. Government Accountability Office official said during congressional testimony last year. The criteria for getting disability are based more on whether you have a condition that could prevent you from working than whether you actually can’t work:

Officials we spoke with from an organization of vocational examiners expressed frustration with having seen young individuals who could work with minor accommodations being provided disability benefits likely throughout their working life, rather than receiving support to pursue work. … Minor accommodations can include a stool for sitting or devices to assist with vision impairments.

There are people with real disabilities who can’t work, and compassionate societies offer them help to get by. Others with legitimate ailments may be able to work, but they turn to disability payments because they have few job prospects. Still others, as the government alleges in the Puerto Rico case, are brazenly scamming a system with inadequate safeguards.

 

Prosecutors are seeking to recover about $3.8 million from those accused, and the crackdown may help deter others from trying to submit fraudulent claims. But fixing the troubled program will take a lot more than one big prosecution.

Tozzi is a reporter for Bloomberg Businessweek in New York.

 

Política y políticas - Politics and policies (From Bloomberg BusinessWeek)

Marketing

Emergency Room Patients, This Bud's for You

By Devin Leonard  August 20, 2013

 

Budweiser (BUD) has long claimed to be the King of Beers. It may also be the King of the Emergency Room. About a third of visits to ERs have an alcohol connection. No surprise there. A new study by David H. Jernigan and colleagues at the Johns Hopkins Bloomberg School of Public Health sought to find out what people who wind up in the emergency room are drinking. The authors report that 15 percent of people interviewed at the Johns Hopkins hospital ER in Baltimore on weekend nights in 2010 and 2011 said they’d been quaffing Budweiser, making it the preferred brand of this market segment, along with Steel Reserve Malt Liquor (TAP), Colt 45 (PBST), Bud Ice, Bud Light, and King Cobra. The findings were published in the journal Substance Abuse and Misuse.

 

It’s important to note that this is a pilot study; researchers interviewed just 105 people. Still, it’s unwelcome news for AB InBev, the Belgium-based multi-national that owns Budweiser. The company would like to distribute more beer in the United States, as it does in other countries, instead of sharing the profits with local U.S. distributors. Some states permit this; others don’t. Predictably, American distributors are strongly opposed to AB InBev’s efforts to control more of the beer supply chain. They argue that big beer makers can’t be trusted to market their brews responsibly. The Johns Hopkins report is a gift to the middlemen.

 

Leonard is a staff writer for Bloomberg Businessweek in New York.