Shankul Bhandare
Investor Warren Buffett is renowned for his success, and his eight-decade career has sparked curiosity about the secrets behind it. Interestingly, the stock market influences his daily McDonald’s breakfast routine. How does that work, and is it tied to his success?
Let’s delve into this intriguing detail.
The Daily McDonald’s Ritual
Buffett makes a daily stop on his short commute from home to Berkshire Hathaway’s Omaha office. “One of the good things about this five-minute drive is that on the way there’s a McDonald’s,” he revealed in the documentary “Becoming Warren Buffett,” as reported by Business Insider.
Buffett uses a unique system to decide his breakfast choice. Each morning, he instructs his wife, Astrid, on the exact amount of change to leave in his car’s center cup holder. These pre-determined sums—$2.61, $2.95, or $3.17—dictate his McDonald’s order.
“I tell my wife as I shave in the morning, either $2.61, $2.95, or $3.17. She puts that amount in a little cup, and that determines which of three breakfasts I get,” the billionaire said.
When I’m not feeling quite so prosperous, I might go with the $2.61 option: two sausage patties I put together. The $3.17 choice is a bacon, egg, and cheese breakfast. However, with the market down this morning, I’ll likely opt for the $2.95 option.
The $2.95 option corresponds to a Sausage McMuffin with egg and cheese. After securing his McDonald’s breakfast, the billionaire enjoys the meal at his desk alongside his Coke, which is unsurprising given he’s the largest shareholder in Coca-Cola.
This breakfast routine might seem peculiar for a man of Warren Buffett’s immense wealth, estimated at around $128.9 billion. After all, the difference between his most and least expensive options is a mere 56 cents.
As Inc.com points out, calculating this frugality as a percentage of his net worth yields an astronomical number with many zeros after the decimal. However, this seemingly trivial routine might hold a deeper significance. It could be a clever behavioral strategy employed by Buffett to avoid the ostrich effect.
What Is The Ostrich Effect?
The Decision Lab defines this cognitive bias as the tendency to shy away from negative information by deliberately distancing yourself from it. Beyond his daily market analysis, Buffett’s breakfast selection might function as a physical prompt.
The ostrich effect is our tendency to avoid negative information, even if it’s important. This can backfire, making problems worse and creating unnecessary costs. Exemplifying the ostrich effect, the site describes someone who eats out frequently, likely exceeding their budget.
They know they should check their bank balance, but anxiety sets in—they suspect a negative outcome and avoid confronting it. This inaction perpetuates the unhealthy spending cycle, leaving them in the dark about their true financial situation.
A Coin Flip For Focus? Decoding Buffett’s Choices
Perhaps the sausage serves as a reminder to analyze underperformance, prompting him to think, “OK, yesterday wasn’t great — what can I do differently to make today better?” Conversely, the bacon might symbolize positive reinforcement, leading him to reflect, “Yesterday was pretty good–what did I do that I should replicate today?”
The website even encourages readers to try a similar approach. They suggest selecting a metric you might usually avoid confronting, such as revenue, cost, quality, or on-time delivery in a professional context. On a personal level, it could be your weight or whether you exercised the previous day.
This strategic breakfast ritual might have played a role in Buffett’s tremendous success as a businessman. Recent reports indicate that the billionaire acquired over 7 million shares in Occidental Petroleum, an oil and gas exploration and production company, within two weeks.
Buffett’s value investing strategy relies on a meticulous five-step process. This approach involves analyzing a company’s return on equity for shareholders, profitability margins, debt levels, dependence on commodities, and potential undervaluation.
