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TMFPostOfTheDay (< 20)

Should Buffett Stick to Investing?

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August 30, 2011 – Comments (10) | RELATED TICKERS: BRK-A

Board: Berkshire Hathaway

Author: EliasFardo

I have been a shareholder in Berkshire Hathaway continually for decades, so I have seen how many good things that have been brought to this company by Warren Buffett. And I have also seen how good of teachers Buffett and Munger can be. But I believe that Buffett’s comments on political issues such as taxes are now hurting him, and possibly Berkshire as well.

I know that Buffett and Munger consider themselves to be teachers as well as business operators. And it is something they do well. But in the same way in which an investor should stick to his circle of competence in investing, teachers should stick to their circle of competence in instructing.

For sure, the list of topics that Buffett could discuss is very long. He has many years of experience and thinking in many business areas, and I know that there are many of us who would appreciate his insights on these topics.

How fascinating would it be to listen to Buffett give examples and explanations of how he arranges compensation packages for the operating executives of Berkshire’s subsidiaries? Not real ones with names and dates, but examples of how he would attempt to align the incentive compensation for the executive with his desires for the company.

He says that his managerial style borders on abdication, until it doesn’t. But, when is that line crossed? We know that he talks to his managers, but what kind of concerns can he discuss with them and still remain consistent with that style? Berkshire is probably the only company of this size that gives its managers such free reign, and we would all appreciate more of his thoughts on this.

I look at all the different industries in which Berkshire operates. Who would not like to read an essay by Warren Buffett on running a furniture store, railroad or brick manufacturing facility?

When it comes to Buffett and Berkshire, there is no lack of topics; no reason to stray. So I consider essays or discussions by Buffett on the political issues of Washington to, frankly, be a poor use of his time and energy. Yes, he has the right to talk or write about what he pleases. And, yes, people are interested in hearing what he has to say. But that does not mean that he should. It is like a school assigning the best musical instructor in the country to teach history and shop.

I am reminded of an episode of “West Wing” when one of the president’s top aides attempted to confront commentators on the internet that he felt were wrong or misleading. When his secretary discovered this she was aghast. She said something like, “You don’t know who those people are,” and made him stop. He had no concept of the kind of cesspool he was entering, but she did. I feel the same way the aide’s secretary felt. For a teacher who has so much to say about Main Street and Wall Street, Warren Buffett does not need to go to Washington to find something useful to discuss.

10 Comments – Post Your Own

#1) On August 30, 2011 at 11:13 AM, BillyTG (29.13) wrote:

Buffett's not going to write an essay on furniture. He's a billionaire with a huge public profile who advises the President.

He's in cahoots with the President and other political and financial string-pullers. I'm very skeptical as to whether or not he actually believes any of the nonsense he has been spouting the last couple years. Or is he's just being a shrewd chess player, protecting his wealth and setting up corrupt government-protected future investments in exchange for some public comments praising the people and policies who are helping him? Think about it.

You're naive if you think his "raise taxes on billionaires" articles, and his ridiculous articles espousing the goodness of big government are not connected to his purchases of Goldman, Bank of America, and his getting special awards

It's also high time that Motley Fool and people on here stop idolizing this man.  He's a good investor. Got it.  He also is someone whose behind-the-scenes politically connected and protected investments are impossible to imitate. For that reason it is foul to encourage common investors with Buffett's success.

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#2) On August 30, 2011 at 11:37 AM, SkepticalOx (99.50) wrote:

It's also high time that Motley Fool and people on here stop idolizing this man.  He's a good investor. Got it.  He also is someone whose behind-the-scenes politically connected and protected investments are impossible to imitate. For that reason it is foul to encourage common investors with Buffett's success.

The reason why he is able to have this influence and get these deals common investors can't get is because he was so successful at investing earlier on in his career without these special things. The funds he ran and early Berkshire investing success was basically good value and special situations investing anyone could've done.

Now that Berkshire is huge, he is playing a different game than retail investors.  

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#3) On August 30, 2011 at 11:58 AM, BillyTG (29.13) wrote:

The reason why he is able to have this influence and get these deals common investors can't get is because he was so successful at investing earlier on in his career without these special things.

 Agreed. Tough to argue with that. (Though he had an extremely privileged upbringing and educational connections, so it's not like he's some totally selfmade bumpkin that sprung from nowhere.) Buffett's incredible wealth commands respect from everyone in our dollar centric society, so, like you say, he is able to get ridiculously special favors. I'm just constantly baffled at the respect given him based on a false perception he has helped create of himself as some folksy, downhome, altruistic, totally ethical standup genius.  Even his official biographer noted his ethical weakness, and his recent hypocriticalness is obvious.

There are plenty of other hugely successful investors that don't go into the public limelight at all.  Maybe we should be looking more at them right now, and less at Buffett. The economy is broken. Buffett does not have the integrity needed in the US (and western world) right now to fix it.

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#4) On August 30, 2011 at 12:24 PM, miteycasey (30.13) wrote:

I think Buffett is doing it because of his age.

As you get older you care less what people think so you are more likely to voice your opinion on a topic you are not an expert. I know I was shocked at some of his opinion pieces, but he's allowed to do that.

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#5) On August 30, 2011 at 1:31 PM, leohaas (31.09) wrote:

Let's just agree to disagree. I take Warren Buffett's opinion over any poster here on CAPS.

Disclosure: long BRK at the time of writing.

PS  Can we please reveal who is behind this "TMFPostOfTheDay" identity?

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#6) On August 30, 2011 at 1:51 PM, TheDumbMoney (51.28) wrote:

The man has been a pretty solid Democrat-leaning independent for forty years.  The fact that he's Warren Buffett does not make him right (Munger disagrees with him).  But all of the efforts herein to do things other than argue against his fundamental point are just pathetic.

Second, when you have a cool $5 billion in cash sitting around while other people are running around screaming like chickens with their heads cut off, you get a good deal.  Period. That's the very essence of capitalism.

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#7) On August 31, 2011 at 12:53 AM, EliasFardo (< 20) wrote:

PS  Can we please reveal who is behind this "TMFPostOfTheDay" identity?

No we can not.  Why do you need to know who I am?

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#8) On August 31, 2011 at 3:23 AM, BillyTG (29.13) wrote:

Elias or whoever you are,

my above rant is simple venting directed at Warren Buffett and our broken, corrupt economy and government. You have some good points and your post was well written, so please don't take it too personally. After spending years on the WB bandwagon (which all fools must go through at some point or another), I'm increasingly disappointed with him and Munger and their recent non-capitalist interventionist opinions at the expense of common Americans and on behalf of the extremely wealthy.

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#9) On August 31, 2011 at 3:25 AM, BillyTG (29.13) wrote:

No we can not.  Why do you need to know who I am?

I think the identity question was to find out who "TMFPosofDay" is, not who Elias is...

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#10) On August 31, 2011 at 10:48 AM, TMFTwitty (86.98) wrote:

PS  Can we please reveal who is behind this "TMFPostOfTheDay" identity?

I'm the editor of our Post of the Day feature. We highlight good reads from the boards and CAPS, and provide differing opinions on sometimes divisive subjects.

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