Wall Street

What Did Warren Buffett Learn from Charles Darwin

The simple principle of natural selection or 'survival of the fittest'
was first revealed by Charles Darwin in the 19th century and has now
been confirmed by the science of genetics. Nature by applying these
principles has created powerful, elegant, awe-inspiring organisms that
have remained resilient and successful for millions of years.

Nature's environment is always slowly changing - the only thing that is
certain is change. Periodically, fast and dramatic changes also occur in
nature. Business has a similar environment to nature e.g. technological
improvements, economic downturns, and wars.

So what can businesses learn from nature?

If businesses can't respond to these changes, they will struggle and
become extinct, especially if the changes are fast and dramatic.

So what did Warren Buffett, the billionaire US investor, the Sage of
Omaha, learn from Charles Darwin?

He invests in businesses that operate in environments or sectors that
are enduring and are likely to stay in fashion even during tough times.

He carefully selects sectors such as food, water, electricity, health,
booze and companies such as Gillette, Coca Cola, he 'naturally selects'
his environment.

Darwin also concluded that natural selection needs diversity to work.
You need a spread of features or capabilities to cope with the changing
environment. If you had all your eggs in one basket and bottom dropped
out of the basket - you'll perish. With a spread of features or products
some are likely to survive a crisis.

You therefore need a broad selection of these types of enduring products
to ensure your survival.

These Darwin principles not only apply to selecting stocks and shares
but to running a business. To become a 'genetic manager or leader' you
need to:

1)Create or find products that sell in enduring markets
2)Have at two to three different products operating in different
enduring markets.

In business and investment 'you make your own rules' so learn from
nature and try to apply these 'survival of the fittest' principles.
Follow Charles Darwin's lead and Warren Buffett's success.

Syd Stewart is the author of "Smiling Owner How to Build a Great Small
Business An Evolutionary Business E-Handbook". He has been an owner and
manager for over 30 years. He Knows What Works and What Doesn't. Visit
his site to find out how you can 'Build a Great Small Business' at
http://www.smilingowner.com

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Charles Darwin was the son of an English physician. As a naturalist on the ship H.M.S. Beagle, Darwin traveled to remote regions of South America. His observations on this trip led him to develop his own theory of evolution. Darwin was particularly interested in the finches and tortoises of the Galapagos Islands. He pondered how different species of animals could have developed on this remote set of islands 200 miles west of Ecuador.

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