Warren Buffett quotes on integrity. Why impeccable integrity is important to becoming a successful businessman and investor.
Warren Buffett pays very strong attention to integrity and honesty both when evaluating potential investments and when selecting managers for his businesses. As he likes to say, “There’s never just one cockroach in the kitchen”. A person or company that is dishonest about one issue is likely to be dishonest about something else as well. Any hint of dishonesty is an important red flag – that will help prevent you from investing in the next Enron.
One of the companies that Warren Buffett once invested in was Freddie Mac. However, Buffett later decided to pull out his investment. He observed that when executives offer earnings projections and realize that they cannot make the numbers, they start making up numbers. Otherwise, companies may engage in activities that do no necessary increase shareholder value, but that are motivated simply by the need to make up numbers. This is likely to lead to poor long-run performance. He also realized that earnings are unpredictable by nature – thus, any company that consistently hits earnings estimates exactly should be suspect.
Warren Buffett cites Rose Blumkin as a formidable manager – he calls her an ‘800-pound gorilla’. Rose Blumkin, or Mrs B. ran a lean and highly admired operation at Nebraska Furniture Mart, one of the nation’s largest and most successful furniture stores. She was motivated by the simple but powerful motto, “Sell cheap and tell the truth”. This created an iron reputation for Mrs B. and her products, and generated for her a loyal following of customers.