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Warren Buffett Warns His Managers Against "Everybody is Doing It"

One of the most successful business people in the world is Warren Buffett, chairman and chief executive officer of the insurance and investment giant Berkshire...
October 31, 2006

One of the most successful business people in the world is Warren Buffett, chairman and chief executive officer of the insurance and investment giant Berkshire Hathaway Inc. So when Buffett writes memos, people take notice. In a recent memo, Buffett warned his top managers against the seduction of "the five most dangerous words in business" - "everybody else is doing it."

Buffett wrote that people have gotten involved in "ill-conceived activities" because they accepted the seductive argument that "a number of well-respected managers were engaging in such practices and therefore it must be OK to do so."

"But it couldn't be more wrong," he wrote. "In fact, every time you hear the phrase 'everybody else is doing it,' it should raise a huge red flag. Why would somebody offer such a rationale for an act if there were a good reason available?" Buffett advised his managers to "start with what is legal, but always go on to what we would feel comfortable about being printed on the front page of our local paper, and never proceed forward simply on the basis of the fact that other people are doing it."

Buffett Warns Managers Against Unethical Practices (Business Insurance 10/10/06)