In Praise of Buffett

This is a small post, as the common vocabulary goes- a quickie. Quick and a climax which is seldom intellectually satisfying and for all practical purposes adding just a mere notch to my blogging bedpost.
Having said that, why not go ahead and do the deed, indeed.

At the very outset, I have never been a fanatic worshipper at the altar of Buffett. Surely, I like the man for his extreme intellectual sharpness but fanaticism he doesn’t invoke. But that should not be taken as a limitation of that man in any measure. I have just become incapable of being swayed by extreme passion these days, for goods which the vast majority swears by.

Coke? yeah okay. Pizza? yeah okay. Buffett? Yeah, okay.
But my greatest weakness has been for the wisdom and the character that Charlie Munger carries.

Tapdancing To Work300.grid-4x2

However, I have been reading Carol Loomis’s book “Tapdancing to work:Warren Buffett on practically everything“. And the more I read, the more I find myself humbled. For one, Buffett has an exemplary clarity of thought. Not that it is a surprise for Buffett observers, but the more I am reading the newspaper articles around Berkshire Hathaway’s purchases, the more I find myself in awe.

Fortune articles are sanitised version of Buffet’s ideas. It doesn’t talk about the different permutations and combinations he considers for a given matter. It doesn’t concern with the fine judgement and skill he brings to the table before pulling the trigger. It doesn’t consider with the different consequences he might be thinking of because of his actions. All we see is the final action and its post mortem by financial media (Fortune in this case). But even in such sanitised version, Buffett sets a very lofty example for people to follow.

I, for one, am particularly hamstrung by my clarity(or the lack of) in thoughts. And if I am to consider putting in Buffett’s clarity in the vast Gaussian curve of humanity’s, then Buffett will figure out somewhere far off in the horizon, sitting pretty at the mark of 6 sigma.

I will rank myself perhaps somewhere in between negative single sigma and the mean. So being humbled is being disingenuous. Ravaged is more like it.

The second quality that jumps out in case of Buffett, is the huge amount of domain knowledge he carries in his head. Stupendous is an understatement. Encyclopedic will be close. He is known to beat the professionals in their own game- and the game not being that of stock picking but that of deal making.
When Capital Cities Corp was in talks with American Broadcasting Company for a merger, Buffett pitched in along with Tom Murphy to negotiate. On the other side of the table two extremely sharp, smart veterans of deal making were present representing the interests of ABC Corp. The name of the gentlemen were Bruce Wasserstein and takeover specialist Joseph Flom.

Peter Petre (the journalist reporting it in 1986 for Fortune) writes:

“As the two sides neared an agreement, the professional dealmakers held out for more. “Buff ett is so smart,” remembers Wasserstein, “that you had to be careful to avoid being picked.” As the dealmaker tells it, he and Flom demanded that Cap Cities sweeten its cash off er for ABC with stock; but Buff ett, who was not to be pushed far, finally closed by throwing in some small change—a thin veneer of warrants that raised the deal’s value by perhaps 3%.”

Sharp as a whip.

I think another Buffett biographer wrote that Warren always pushed a super hard bargain and used the existing structure to his advantage. When the brokers were making market for illiquid pink sheet stocks, Warren would repeatedly drive the purchasing price down by first quoting a price and then withdrawing it.

In his 1986 Annual Report also where he posted the Business Wanted notice- he lays out one binding condition regarding valuations- the seller has to reveal his price. No preliminary talks will be entertained without a price tag. That’s remarkable!

Any negotiator will tell that the one who names the price first-loses.

The third aspect which comes out of all this is the picture of a man who has put multiplitudes multitudes of 10,000 hours in perfecting his trade. Concentration of his efforts, time and resources in perfecting one single idea. Thats the discipline of a samurai.

I for one, am still looking out for a job which will pay me to become wise.

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5 thoughts on “In Praise of Buffett

  1. I use Daniel Jones. I guess I’m old fashioned.
    Anyways, if you liked “tapdancing to work”, then you would like distant force too. It’s a Henry Singleton biography. Give it a try.

    Like

  2. I am a big admirer of Singleton. I have been collecting resources about him for quite some time but didnt know he had a biography apart from a “treatment” in the recently published book – The Outsiders.

    Thanks for pointing that out for me.

    Like

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