Some may call this Indian Summer, but I call it Warren Buffett Season.
It is the only season that lasts twelve months a year. You can't swing a cat around a financial news organization nowadays without snaring somebody writing about Warren Buffett. Usually it's along the lines of "What is Warren buying?" but lately there is a hush, and a sad pang can be heard reverberating across the prairie. Warren Buffett is considering a successor!
So with reverence more appropriate for the papal succession than a glorified hedge fund, there is one article after another about the Apparent Chosen Successor, a Florida hedgie named
To which I can only add, who cares?
I know I'm going to get yelled at for saying this, but I am sick and tired of Warren Buffett. Oh, I don't mean the man himself. I met him some years ago, and he is a perfectly decent gentleman. But I am sick and tired of the media fascination with Warren Buffett. I think it's time we moved on to something else and give this man the obscurity that he supposedly craves.
I understand why we are so fascinated with Warren Buffett. I've seen the numbers. I've heard the folksy aphorisms. I'm aware of the several zillion books that people have written about him over the years. I'll admit, he's a great guy, and he has a good record as a money manager. But I think that it's high time that we put Buffett in proportion. Allow me to attempt to do so.
Let's start with:
The numbers. Despite
it's certainly true that Berkshire Hathaway stock has beaten the
for 15 of the past 22 years and boasts a 20% annual compounded gain in book value between 1965 and 2009.
That's great. I'll even go so far as to throw my copy of
A Random Walk Down Wall Street
out the window, and say that Buffett pulled off this fine record because he's a great stock-picker, and not because a chimp with a dart could have done a better job of picking stop. But even if we all agree that the efficient market hypothesis is a load of bunk (which I am not ready to do), the fact remains that long-term performance records don't mean that much to an investor, today, in deciding whether to either buy Berkshire stock or mimicking his investment portfolio.
For one thing, that long-term great performance record doesn't mean much to investors who bought Berkshire just before the big tumble in 2008. The market indices have beaten the pants off Buffett over the past two years (just as they suggest is inevitable in Random Walk).
Investing like Warren. If I had a nickel for every pundit who professes to tell us how we can invest like Warren Buffett, I could probably move to Omaha and set up my own glorified hedge fund. The problem is that
, summarized in the
, provide investors with only crumbs -- and widely followed crumbs at that.
It does an investor today virtually no good to know that he owned big stakes in
Procter & Gamble
as of June 30. That's like my telling you what my blood pressure was on that day. I could have had a stroke since then.
Buffett is a buy-and-hold guy, so the identity of his oldest holdings is only slightly less consequential than the identity of his newest holdings. By the time any new portfolio change details emerge, they are already old news by the time they are announced.
As for his famous ghostwritten
, which Berkshire modestly keeps online, they make enjoyable reading, but the key thing to remember is this line that appeared in his 2010 letter: "The big minus is that our performance advantage has shrunk dramatically as our size has grown, an unpleasant trend that is
to continue." The italics are in the original. Note that he doesn't say "may" continue or is "likely" to continue. The operative word is "certain." I really don't see why anyone bothers reading the letter after this point. Buffett is guaranteeing that Berkshire is too big to succeed as well as it did in the old days. And as far as succeeding under a different guy is concerned -- no way.
Philanthropy. I think it's delightful that Buffett is giving away 50% of his Berkshire stock to charity and that he wrote an
article in Fortune
to challenge all the other fat cats of America to do likewise. Now, what I'm wondering is this: Why? Why am I, a non-billionaire, being exposed to this appeal? Is he donating such large amounts of money out of the goodness of his heart or there an element of showboating at work here? Or maybe a bit of each?
The reason I ask is because whenever I read about a very rich guy, very ostensibly giving away money, I always think back to some pithy
comments made by Maimonides,
the ancient philosopher and ethicist, quite some time ago. In his "Eight Degrees of Charity," Maimonides wrote that the most noble form of charity, right below helping a guy get a job (not practical at the level of mega-giving) is "the one who gives
charity to the poor, but does not know to whom he gives,
nor does the recipient know his benefactor
." In other words, what Buffett is doing is great -- but skipping the publicity could make it even better.
I'm realistic. I don't expect that the adulation directed at Warren Buffett is going to end any time soon. We in the media are fascinated with the super-rich. We're suckers for a ghostwritten home-spun anecdote from a billionaire in a cheap suit. In fairness, we're not entirely to blame. For a guy who supposedly doesn't care much for publicity, he sure seems to pull out all the stops to get it.
Gary Weiss has covered Wall Street wrongdoing for almost a quarter century. His coverage of stock fraud at BusinessWeek won many awards, and included a cover story, "The Mob on Wall Street," which exposed mob infiltration of brokerages. He uncovered the Salomon Brothers bond-trading scandal, and wrote extensively on the dangers posed by hedge funds, Internet fraud and out-of-control leverage. He was a contributing editor at Conde Nast Porfolio, writing about the people most intimately involved in the financial crisis, from Timothy Geithner to Bernard Madoff. His book "Born to Steal" (Warner Books: 2003), described the Mafia's takeover of brokerage houses in the 1990s. "Wall Street Versus America" (Portfolio: 2006) was an account of investor rip-offs. He blogs at garyweiss.blogspot.com.