Warren Buffett

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Mister Imperceptible
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Warren Buffett

Post by Mister Imperceptible » Thu Feb 15, 2018 4:30 pm

https://www.thenation.com/article/speci ... -billions/

As someone who has read his biography (The Snowball) and is an admirer of his focus and dedication to value investing (having also read Ben Graham) I think this article touches on not only Buffett’s hypocrisies but also the state of our economy. (I considered posting this in the “Why do the rich get richer” thread.)

This is not to criticize Buffett, because if he weren’t doing what he is and has been doing, someone else would. But I roll my eyes when I hear him talk about how easy it would be to solve the national deficit or how we need to change tax laws to be less beneficial to the 1%. This coming from the same guy who admits that the best investment would be to own the toll on a bridge everyone has to cross, just so he can make money effortlessly. The same guy that may or may not have cornered the silver market. Those are not the actions of an entrepreneur contributing to global or national growth (maybe growth in Omaha, as his worshippers descend on his cult-like shareholder meeting, buying furniture and diamond rings). This is a person gaming the system to funnel wealth to himself. However, when one gets to his level of wealth and is that publicly visible, it probably becomes necessary to cultivate some image that is palatable to the masses.

Yes, let’s emulate someone’s investing methods if they work. But how admirable is someone who meets with prominent Chinese nationals in China and still insists on being served hamburgers and French fries?

I know, I know, he made “The Pledge.” You can be certain that many in similar positions have not. And can you blame them? Better to be inside the moat than outside of it.

Like most people here, I would rather be inside the moat than outside of it. Not sure I can bear the rosy pictures people like to paint, however.

IlliniDave
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Re: Warren Buffett

Post by IlliniDave » Fri Feb 16, 2018 7:01 am

I don't know what your purpose is other than to criticize Buffet/people that admire him as a businessman. I don't see a contradiction between accumulating wealth and having opinions on tax policy that would be less favorable to him and his peers. Or apparently being a little unimaginative in his dietary preferences. I don't spend a lot of time thinking about Buffet or trying to imitate him. It's coincidence, but I do more/less follow his investing advice for amateurs.

I get it that people that come out on top tend to step on toes along the way (and are perceived to have stepped far more), aren't typically Mother Theresa clones, and that it is very popular to be resentful of such people. I grew up in a family/culture where everything suboptimal was blamed on the "rich ba$tards". Sometimes that blame was probably well-placed, but I suspect most of the time it was not.

Jason
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Re: Warren Buffett

Post by Jason » Fri Feb 16, 2018 9:37 am

Mother Theresa wasn't Mother Theresa.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Fri Feb 16, 2018 11:21 am

I’m not sure you can get to where he is without stepping on toes. I just think the overall portrait we have could afford to be more honest.

Jason
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Re: Warren Buffett

Post by Jason » Fri Feb 16, 2018 11:46 am

When the writer stated that "You didn't know he didn't own Sees Candy" it was obviously she was preaching to an imagined choir. Any person with a general interest in Buffet knows he owns See's Candy. There has always been Buffet detractors. Those who didn't like how he established or treated his family, those who didn't like that he didn't start giving away money earlier, those who feared his population control attitudes went too far. Just as sure there would (will) be Mister Imperceptible detractors if (when) you reach a billion. Yes he's the Jerry Garcia of the investing world but even the most die hard Dead Heads know "Uncle Jerry" was a BMW driving douchebag who secretly laughed at the whole enterprise and couldn't stand his band mates.

The article is trifling bullshit. He's the wealthiest person who ever lived who didn't create a product. He has made a lot of people wealthy. And if we did a forensic investigation into the character of every individual who we made money with, we'd be complicit worthy of death. In the realm of general ethics/morality, especially when confronted with certain other prominent billionaires in the news lately, this guy has been exemplary.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 12:20 pm

I should have been clearer. The critique is of the system (not Buffett), which provides too much risk-free return to those already possessing wealth. The entrepreneur is supposed to take risks with his money, and the return is supposed to be a reward for that risk. We all win when those risks produce actual progress (see Elon Musk). I’m not hating the player, I’m hating the game. See all my disclaimers above regarding Buffett as an individual.

For example, I’m a really smart guy, as are many here. If I could spend my twenties and thirties doing something actually beneficial to society, rather than cynically doing that which makes me the most money, we would live in a better place.

I’m working through my own feelings of guilt as I contemplate buying MO.

chenda
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Re: Warren Buffett

Post by chenda » Sat Feb 17, 2018 12:40 pm

Mister Imperceptible wrote:
Sat Feb 17, 2018 12:20 pm
For example, I’m a really smart guy, as are many here. If I could spend my twenties and thirties doing something actually beneficial to society, rather than cynically doing that which makes me the most money, we would live in a better place.
Well what's stopping you then ? 😀

plantingourpennies
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Re: Warren Buffett

Post by plantingourpennies » Sat Feb 17, 2018 12:42 pm

Mister Imperceptible wrote:
Sat Feb 17, 2018 12:20 pm
I should have been clearer. The critique is of the system (not Buffett), which provides too much risk-free return to those already possessing wealth. The entrepreneur is supposed to take risks with his money...
Buffett risks his capital with every investment he has made-many have tried to replicate his success, and many have failed and destroyed their capital. I'm not sure why you would compare him to Musk, but it's worth noting that without capital markets (and investors trying to make a return) Musk wouldn't have the money to fund rockets or battery powered cars.

There is no hypocrisy for somebody to make money by following the current rules, but also argue that the rules should be made more fair for everybody else.
Mister Imperceptible wrote:
Sat Feb 17, 2018 12:20 pm
For example, I’m a really smart guy, as are many here.
Uh-huh.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 12:44 pm

After years of hard work and student debt I finally have a high income. Seems silly to abandon this line of work now that I’ve finally moved to the upward part of the S curve. I am essentially wearing golden handcuffs:

http://earlyretirementextreme.com/bette ... urves.html

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 12:47 pm

I’m not criticizing Buffett, I’m not saying he never took risks. I’m saying the current system makes it too easy for him. He broke through a plateau where now he sitting with $100 billion in cash and waiting for the next drop. It’s probably a benefit to society, because that’s $100 billion less that the Fed needs to print if and whenever the market crashes again, but that’s another topic.

Campitor
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Re: Warren Buffett

Post by Campitor » Sat Feb 17, 2018 1:12 pm

Mister Imperceptible wrote:
Sat Feb 17, 2018 12:20 pm

For example, I’m a really smart guy, as are many here. If I could spend my twenties and thirties doing something actually beneficial to society, rather than cynically doing that which makes me the most money, we would live in a better place.
So who determines what is beneficial to society? You? Me? The girl next door? Ask 1 million people what is beneficial to society and you will get a million different answers or at the very least a million different ways on how to accomplish it. Money and the free market capitalist system is the best means of benefiting society because individual persons, via the money earned by their labor, will purchase the goods and services they feel they need or want. No single person, committee, or government could possibly determine what is best for any given individual or group. Our needs and wants are different and its impossible for any centralized government or group to intelligently and effectively allocate finite resources that have alternative uses.

The fact that something makes money, or more of it than the typical occupation, means its valued and wanted otherwise why would it pay well? Those who take high paying jobs are actually doing the most benefit to society because they are providing a service that is in demand; its importance is highlighted by the price people are willing to pay. Its only when government interferes with the free market, via crony capitalist laws and monopolies, that the price of goods and services don't reflect their actual demand or need.

And making lots of money isn't a deterrent to giving to charity or volunteering some of your time to the needy. Rich people are rich because they have identified goods and services that are in demand; a skill that not everyone cultivates. Being contemptuous of the rich is like being contemptuous of Michael Phelps for being good at getting Gold Medals. Michael Phelps spent hours in cold water practicing his craft so he could get Olympic Gold. Rich people spend the same amount of time figuring out how to provide the goods and services that will get them their Olympic Gold medal which is cash. I guarantee that anyone who hates the rich has never spent any time with anyone of significant wealth. I highly doubt many would put in the hours, or risk their private capital, to be in the top 1% or even top 10%.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 2:28 pm

I’m not contemptuous of the rich. For the last time on this thread, I will say I am not criticizing an individual or class of people. Nor am I an advocate for a state-planned economy; that seems to be the source of a good deal of society’s malinvestment. I do not know what is best for society, I’m not qualified to suggest what is. If my being critical without positing a solution means it was whiny and unconstructuve to start the thread, I apologize for wasting your time.

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Re: Warren Buffett

Post by jacob » Sat Feb 17, 2018 3:05 pm

It would be a pretty dumb entrepreneur/investor who takes risks with their money. This whole risk-reward connection is a concept peddled by modern portfolio theory in which risk equals random price volatility. Now that [volatility] is applicable if you're managing a mutual fund and have to match inflows and outflows of customer money as a prime concern ... but that's not a good way to think about principal/your own money at all!

Your job as an investor is to seek the highest returns with the smallest risk of losing money. (That's a very different kind of risk than having the market price moving up and down so the standard deviation is high.) Compare that to a gambler who enjoys randomness for the sake of risk even if the expected payoff is zero. Baccarat is an example of this.

So there are at least three ways to understand risk.

What professional investors are in the business of doing is to allocate capital from enterprises where the return relative to losing money is low (building McMansions in 2007) to enterprises with the return relative to losing money is high (owning a toll booth or a water utility). I think most of the public/voters tend to ignore or not realize the second-order effects of what the financial system actually does ... what purpose it serves. I think "indexers" are particularly naive/ignorant in that regard because to them this allocation-process is hidden under the hood so to speak. The rest are just annoyed about how a few people apparently control millions [having invested them in industries] while the multitude would rather have those millions to "pay their bills" and order pizza.

IOW, real investors are in the business of allocating capital so that the supply meets the demand. (Now we can argue who is to blame if consumers demand stuff that's bad for themselves ... and investors supply it ... where does responsibility begin and end here?)

However, insofar nobody sold stupid projects (here projects that have no demand) while buying smart projects on a discretionary basis, financing would be the same for every single project. This would mean that many economic resources would be wasted on Mickey Mouse projects as long as value-insensitive "savers" tossed money at every thing (Because diversification).

So, now, accumulating a fortune doing that and sitting on that money is an indication that one has very successfully fixed a lot of inefficiencies. Since that money is still in the account, it also means it hasn't been spent on "stupid shit" like McMansions, clown cars, or rotten shark art.

Anyhow .. that's how I see it and have seen it for a while. Your value to society can be closely discerned by your NW because it shows how much value you've added minus the value you've taken away by spending it. At least as it's measured by the market system.

Now it can be argued whether that market system measures it correct; the problem with externalities, etc. However, people who complain about the rich are usually complaining about who is controlling that money---not how it's controlled.

Jason
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Re: Warren Buffett

Post by Jason » Sat Feb 17, 2018 3:13 pm

@MI

Listen, no one is asking for the public self-flagellation. Although if you're volunteering it, I always enjoy it. We're just talking here. Everyone is looking for clarity on shit in all its various and sundry permutations. You put something out. Good on you.

Have you seen the documentary "Becoming Warren Buffet"? Maybe it's too winsome a portrayal for some but I enjoyed it. The thing I took away is that this guy is "different" in the sense that he functions at a level that most people don't. I think if you ask Buffet what he is "doing" he will say he is painting a canvass. It's art to him. And many people have benefitted from his art. Look at it from the micro, not the macro and benefit from his pursuit. Asking Buffet not invest would have been like asking Coltrane not to play the saxophone. It's aint happening. Unless a person of great achievement is doing something that you find personally reprehensible, let it inspire you. And for Christ's sake, let the guy enjoy his McDonald's. You're concern for the public well being is admirable, and makes the polis a better place. So make it a part of your knitting as you stick to it.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 3:22 pm

I have not seen the documentary but I did read The Snowball, which is also likely a winsome portrayal. Count me among Buffett’s fans.

Jason
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Re: Warren Buffett

Post by Jason » Sat Feb 17, 2018 3:45 pm

My completely amateurish take is that he might have Asperbergers or something like that. Many think Bill Gates is on the autistic spectrum and they do enjoy each other's company. They both possess a frightening focus and there is anecdotal evidence of personal behavior that at first blush seems sociopathic in its callousness (Buffet not willing to buy his sick daughter a tv set, Gates belittling people to tears) but may in retrospect be a part of the disorder. The doc is as much a love letter to his wife as anything. It also shows the portrait of the billionaire at a young age. This guy was wired for this. It was not rape and pillage. It was having a calculator for a brain.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 3:55 pm

I agree, his wiring is perfect.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 3:59 pm

@jacob

I concur completely, it is usually just the outs who want to be the ins. I’m saying the overall economic organization is inefficient.

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 4:10 pm

@jacob

I should give more details.

I dedicate a great concern to economics and investing. However, I dedicate most of my time to my employment. If I had as much free time as I had time spent in employment, I would likely be dedicating that time, too, to economics and investing. Is that time spent to the study and practice of economics and investing beneficial to the system, insofar as it adds liquidity to the general commerce?

I agree that generally net worth is a sort of “proof of work,” insofar that wealth is channeled most efficiently. (Provided of course the ultimate efficiency is not some hellish hive mind.)

Mister Imperceptible
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Re: Warren Buffett

Post by Mister Imperceptible » Sat Feb 17, 2018 4:19 pm

Well. I suppose you well answered that question with the fixing inefficiencies bit.

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