14 ms·

“Becoming Warren Buffett,” the Man, Not the Investor

202 points by artsandsci 10y ago

iliconvalleys 10y ago
It's interesting to note that Buffets wife was regularly active in supporting civil rights as well as Buffet himself. Combine this with his $5Billion bailout of Goldman Sachs along with Goldmans CEO joining the battle lines along with the Linux community, white and black hat hackers and you've got a perfect storm for an attack on the trump administration which will result in its fiery demise.
- bbctol 10y ago
  Man, I'm starting to hate elaborate fantasies about how Trump will finally go down almost as much as I actually hate Trump, and that's a pretty high bar.
BillShakespeare 10y ago
I came across an interesting story the other day about his relationship with Rose Blumkin, Founder of Nebraska Furniture Mart and how she tricked him into buying NFM without a non-compete clause and he paid the price. Story: http://www.infoblizzard.com/the-blog-smog/a-humorous-story-about-rose-blumkin-the-founder-of-nebraska-furniture-mart-and-how-she-worked-over-billionaire-warren-buffet http://www.infoblizzard.com/the-blog-smog/a-humorous-story-a...
- supahfly_remix 10y ago
  I read the link and am left to wonder at the role of business ethics in a business deal. Was it unethical for her to start a competing business? Seems like an uncool move, but of course I'm reading this years after the fact.
  - dforrestwilson1 10y ago
    He still admires her, I think simply for her hard work. The praise hasn't stopped coming.
  - drzaiusapelord 10y ago
    On a practical level, if I sell my small business, is a non-compete really something that's practical? If all I know is furniture sales and all my contacts are in the furniture business, etc what am I supposed to do now, assuming the sale didn't make me incredibly wealthy to the point where I dont need to work ever again? Its unrealistic to expect people to suddenly learn new skillsets later in life, especially if they have decades invested into these skillsets. I think this is why non-competes in many industries are ultimately unenforceable and why the courts or state legislatures never want to make non-competes powerful. People aren't machines. They can't really be retooled. If I get a job with Bigco and then switch to Smallco, Bigco shouldnt be able to tell me I can't be a programmer there. Corporations shouldn't have this level of power over us. Even if we dismiss the first scenario as a 'business sale' I'd argue that sole proprietor businesses or any business with only a few people is much closer to being an employee somewhere. You can't expect someone to give up their only skills for 5 to 10 years for a modest sale. Not every sale is a SV-like billion dollar plus sale.
    - jasode 10y ago
      >, if I sell my small business, is a non-compete really something that's practical? Yes, it's practical. If the non-compete is explicit and part of the conditions for the sale, the owner-seller is supposed to factor that into her selling price. E.g. if the owner has a mental price of $2 million to sell the furniture business but is unhappy about not being able to open another store, she needs to raise her price to $3 million to be content with not competing. In other words, the buyer of the business is partially paying the previous owner to not compete -- for a limited time such as 5 years. Maybe you're thinking of employees and their unenforceable non-compete clauses trying to prevent them working for competitors in California. That doesn't apply to the owners selling their businesses.
    - Spooky23 10y ago
      Usually a non-compete like that is geographically boxed. When you're selling a business, you're selling the future. If you sell your furniture business, then turn around and open up a store down the road, you're attacking the ROI that you projected going forward and the buyer acted upon in good faith. Sketchy. Employees are a different matter, as it's a one-sided arrangement where the employee has little bargaining power. Small businesses are different -- both parties are free agents.
  - tim333 10y ago
    I don't think she 'tricked Buffett' on the deal. She started the competing business in anger after arguing with members of her family about running the main business. Dunno about the ethics. It worked out pretty good for Buffett in the end. He bought NFM for $80m and last year the Dallas branch alone did $750m in sales.
- ovulator 10y ago
  Nebraska Furniture Mart is such a weird anomaly. You hear of the local places being run out of town by all the national big chains, but the national big chains can't compete with Nebraska Furniture Mart locally, and the ones than spring up around it, shortly die off.
  - tim333 10y ago
    It's not that weird. It wins by having bigger stores, lower costs and lower prices than anyone including the national chains.
- aantix 10y ago
  "Mrs. B." was a total hustler (in a good sense). I grew up going to NFM. We were once there to buy carpet; she's wheeled up to us in her cart (she had to be 80+ at the time), nearly hit my little sister and basically said "what price do you need to purchase this carpet today?". She was famous for running the sales floor, even though she could have long retired prior.
verelo 10y ago
From the article: financial questions “are easy,” as Buffett says. “It’s the human problems that are the tough ones.” Preach. The more I 'practice business' the more I come to appreciate that the only thing out of your control are people (and that's probably a good thing). Everything else you can structure some kind of deal to resolve, but people are emotional, untrusting, illogical and often good at hiding their true motives.
- valuearb 10y ago
  I think Buffett would say not just people, but you are emotional, untrusting, illogical and good at hiding your motives from yourself. Thats why he preaches about how you live your life affects the quality of your decisions. He's not on Wall Street for a reason, living in Nebraska shields him from a lot of superfluous nonsense and allows him to focus on factual analysis and decisions.
tdk 10y ago
OT, but it's annoying the way The New Yorker writes cooperation 'coöperation' (ditto 'reëlect'). There's zero justification for this, etymologically or orthographically, it's just pure pretension.
- roter 10y ago
  There is a fair bit of background with the diaeresis at the New Yorker [0]. [0] http://www.newyorker.com/culture/culture-desk/the-curse-of-the-diaeresis http://www.newyorker.com/culture/culture-desk/the-curse-of-t...
- ant6n 10y ago
  Oh it's total pretension, but there _is_ justification for this. The diaeresis separates out the second vowel. It's pronounced not "rehlect" but "re-elect".
- stephancoral 10y ago
  Lol typical hacker news blowhard going off on something they have no idea about . "Orthographically" speaking there IS a justification and you would've found it if you spent three seconds of effort: diaeresis ‎(plural diaereses) 1. (orthography) A diacritic ( ¨ ) placed over a vowel letter (especially the second of two consecutive ones) indicating that it is sounded separately, usually forming a distinct syllable, as in the English words naïve, Noël and Brontë, the French haïr and the Dutch ruïne. It makes perfect sense to use the diacritic in this way and it is part of their style guide, has been for some time. You couldn't even spend the time researching what you're complaining about. Talk about pretension.
  - jazzyk 10y ago
    Factually correct. Still pretentious :-)
  - tdk 10y ago
    I'm well aware it's a diaeresis, and that it's part of their house style. That's exactly what I'm objecting to. The diaeresis is obsolete modern English (with rare exceptions) and putting it in interrupts the flow of reading. There is no excuse for it in 'cooperation', and only the only reason they do it is in order to show off they know about it - IOW pretension.
mbillie1 10y ago
This is just rich-people worship. What this has to do with tech, other than that a bunch of tech people also worship the rich, is beyond me. Pass.
- backordr 10y ago
  It's not so much rich-people worship as it is about observing another individual who happened to become one of the richest people in the world. We can learn a lot from each other - being ignorant of the person next to you is a dangerous habit.
  - floopidydoopidy 10y ago
    We can learn a lot from a cross section of our entire population. From one man, we can learn about rich person worship and life lotteries.
    - deleted 10y ago
      [deleted]
    - valuearb 10y ago
      You should read some of Buffett's voluminous writings. There is nothing like a lottery going on, he's the most skilled investor the world has ever created. In his twenties and thirties he ran the Buffett Partnerships and averaged around 35% a year returns, over 13 or 14 years, beating the market by a massive amount. He retired around age 40, then bored went back to full time work running a company he controlled, Berkshire Hathaway. At one point he had beaten the market all but a couple of 50 years. In his shareholder letters he describes very clearly how he does it. Its a combination of being an excellent value investor, understanding which companies have competitive moats, and working very hard at reducing negative psychological biases. We can't be as good as investor as WEB, but reading and understanding his shareholder letters will make you a much better one in anything you do (buying a house, car, etc), and understanding the psychological biases that drive you to bad investing decisions can be applied in many areas.
nappy-doo 10y ago
I've been a longtime Buffett follower. I haven't seen the HBO documentary yet but am looking forward to it. I would recommend Buffett's authorized biography "The Snowball" by Alice Schroeder. Before writing it, WB told AS that if she got different stories from different tellers to go with the one that was least flattering to WB. Since it was written, WB hasn't denounced the book, but has broken off what were cordial ties with the author. Speculation abounds, but mostly it's because she hints that Susie wasn't entirely faithful to Buffett when she left Omaha and moved to California. (She never comes out and says it, but it's implied.) In any case, it's an excellent book, and the one written with the most access to Buffett and his notes.
- dharmon 10y ago
  Alice Schroeder did a small AMA on reddit years ago that is worth reading. When asked about their broken-off relationship, she says that they aren't unfriendly or anything, but that she is basically no longer in his inner circle. Her explanation is that he figuratively laid himself bare before her for the book, which was necessary for it, but that it made things afterward quite awkward. Kind of like seeing a close friend naked. Second the recommendation for that book. I like it better than the Lowenstein book, but any Buffett-head should read both, of course, as each has some details the other doesn't. I was also confused about the implications around Susie and just assumed that she had an affair with the tennis coach guy, as cliche as that sounds. Edit: Dug out the AMA. Definitely read if you are a fan of Buffett / The Snowball. https://www.reddit.com/r/investing/comments/2550vq/hi_im_alice_schroeder_author_of_the_snowball/ https://www.reddit.com/r/investing/comments/2550vq/hi_im_ali...
- davidw 10y ago
  I'd highly recommend the book too - it's an interesting portrait. I had superficially thought 'boring business guy', but there's more to it than that.
  - tim333 10y ago
    I found it a bit slow and think Lowenstein is a better read https://www.amazon.co.uk/Buffett-American-Capitalist-Roger-Lowenstein/dp/0385484917/ref=sr_1_1?s=books&ie=UTF8&qid=1485992215&sr=1-1&keywords=warren+buffett+lowenstein https://www.amazon.co.uk/Buffett-American-Capitalist-Roger-L...
valuearb 10y ago
Lots of investors understand how to value companies, far fewer actually apply it regularly. I'm always amused when some Wall Street advisor discusses a businesses cash flow and growth rate using terms from his valuation courses, then starts talking about market sentiment and concludes by analyzing it's chart. It's like a physicist laying out the math perfectly for an orbital launch, but then starts analyzing launch times using Astrology. Very, very few investors apply valuation methodologies so well they they become true value investors, the name is really a marketing label for most funds. One necessary part of being a value investor that Buffett harps on in his letters is psychology, the ability to avoid bias in order to make decisions and not undo them in a panic. He works really hard to insulate himself from irrational fears, and focus on known facts. For example, he tries to never know what a company's stock trades at when he reads their annual reports and start making his own estimate of it's value. If it's a great company and it's trading for $100, he doesn't want to be subconsciously biased to raising his valuation estimate just to justify buying it. There is a great story from his partnership days. His partners were told up front he'd never discuss what they were invested in, he didn't want anyone front-running his trades at hurting the partnerships results. But one day during a market tumble a partner rushes in and demands to know if Buffett had invested in certain stocks that had crumbled. Warren just buzzes his secretary, asks how much the partner's share was worth, and told her to write him a check for that amount, and told the guy you're out. He wasn't going to panic. He wasn't going to let others try to panic him.
- nabla9 10y ago
  (disclaimer: I say this as someone who's has invested into Berkshire Hathaway) Buffet's success is only partly his ability to value companies and buy them at good price. He is good at that, no doubt, but it's just half of the story. The real genius is the way Buffet has structured his business to give him permanent advantage. The core of Berkshire Hathaway is the insurance business, GEICO and Berkshire Reinsurance. These companies are very profitable and generate huge cash inflow. This cash is cheaper compared to what other investors get trough financial sector. Especially when times are tough and money is tight. When other investors must sell something they own or get expensive loan, Buffet is drowning in cash and looking ways to spend it. Someone who is just as good at valuing companies starts several percentage points behind Buffet when they scramble to finance their acquisition.
brilliantcode 10y ago
I've figured out how to produce returns using cash secured or naked option strategies utilizing informational asymmetry gained from rigorous analysis of corporate Q's and K's that will actually generate wealth not slowly build it like value investing does. This critical edge that has been hiding in plain sight but validated by actual large funds using the same methods. Someday, newyorker.com and HN will be reading how a "Korean Canadian stock whiz turns his $50,000 CAD tax free savings account into $50,000,000 CAD" edit: due to downvotes I will not be revealing this prized strategy.
- corybrown 10y ago
  Hope it works out for you, best of luck!
- acedinlowball 10y ago
  I use the same technique. It has been working very well for me so far. I'm not rich, but lets say I will never have to worry about money again for the rest of my life, and neither will my descendants for the next 6 generations.
- ryankennedyio 10y ago
  The downvotes say it all, but don't ever write naked options. The strategy has positive expectancy, except every few years you lose >100% of capital, since the risk is almost unbounded.
  - sokoloff 10y ago
    I write naked puts almost every week. It's about the only way I buy highly liquid tech stocks nowadays. The risk is absolutely bounded, of course (and similar to buying a stock outright). Naked options are not the problem; naked calls are, of course, far more risky and most investors are barred from writing naked calls on individual issues.
  - brilliantcode 10y ago
    I never write options. cash secured put/call options are buying not selling options.
taivare 10y ago
I find some of his dealings disturbing. https://www.publicintegrity.org/2015/04/03/17024/warren-buffetts-mobile-home-empire-preys-poor https://www.publicintegrity.org/2015/04/03/17024/warren-buff... On a personal level he took over a local manufacturing co. in the city I live in. My former neighbor was working there when he took over the company. In a press release he said he was pleased with managements performance at the company and they should continue to operate as they were. My neighbor in his early 60's was worked 7 days a week , 11 to 12 hr. days. It was apparent they were trying to force him out. They accomplished their goal , he had a stroke on the job and died a few days later. I agree Warren was not responsible personally , I don't know where the buck stops. I lost a good neighbor soon after his dog passed.
- valuearb 10y ago
  Sounds like you have a problem with the owners/managers, not Warren. Do you really think he came all the way from Nebraska to point out your neighbor and tell management to work him to death? Warren is notoriously hands off with the businesses he buys. He typically buys them because they are well run and he doesn't have time to fix anything.
  - taivare 10y ago
    By took over I meant he bought the company. If you read the bottom of my comment . . ( I agree Warren was not responsible personally , I don't know where the buck stops. )

202 points by artsandsci 10y ago

It's interesting to note that Buffets wife was regularly active in supporting civil rights as well as Buffet himself. Combine this with his $5Billion bailout of Goldman Sachs along with Goldmans CEO joining the battle lines along with the Linux community, white and black hat hackers and you've got a perfect storm for an attack on the trump administration which will result in its fiery demise.

bbctol 10y ago
Man, I'm starting to hate elaborate fantasies about how Trump will finally go down almost as much as I actually hate Trump, and that's a pretty high bar.

BillShakespeare 10y ago

I came across an interesting story the other day about his relationship with Rose Blumkin, Founder of Nebraska Furniture Mart and how she tricked him into buying NFM without a non-compete clause and he paid the price. Story: http://www.infoblizzard.com/the-blog-smog/a-humorous-story-about-rose-blumkin-the-founder-of-nebraska-furniture-mart-and-how-she-worked-over-billionaire-warren-buffet http://www.infoblizzard.com/the-blog-smog/a-humorous-story-a...

supahfly_remix 10y ago
I read the link and am left to wonder at the role of business ethics in a business deal. Was it unethical for her to start a competing business? Seems like an uncool move, but of course I'm reading this years after the fact.
- dforrestwilson1 10y ago
  He still admires her, I think simply for her hard work. The praise hasn't stopped coming.
- drzaiusapelord 10y ago
  On a practical level, if I sell my small business, is a non-compete really something that's practical? If all I know is furniture sales and all my contacts are in the furniture business, etc what am I supposed to do now, assuming the sale didn't make me incredibly wealthy to the point where I dont need to work ever again? Its unrealistic to expect people to suddenly learn new skillsets later in life, especially if they have decades invested into these skillsets. I think this is why non-competes in many industries are ultimately unenforceable and why the courts or state legislatures never want to make non-competes powerful. People aren't machines. They can't really be retooled. If I get a job with Bigco and then switch to Smallco, Bigco shouldnt be able to tell me I can't be a programmer there. Corporations shouldn't have this level of power over us. Even if we dismiss the first scenario as a 'business sale' I'd argue that sole proprietor businesses or any business with only a few people is much closer to being an employee somewhere. You can't expect someone to give up their only skills for 5 to 10 years for a modest sale. Not every sale is a SV-like billion dollar plus sale.
  - jasode 10y ago
    >, if I sell my small business, is a non-compete really something that's practical? Yes, it's practical. If the non-compete is explicit and part of the conditions for the sale, the owner-seller is supposed to factor that into her selling price. E.g. if the owner has a mental price of $2 million to sell the furniture business but is unhappy about not being able to open another store, she needs to raise her price to $3 million to be content with not competing. In other words, the buyer of the business is partially paying the previous owner to not compete -- for a limited time such as 5 years. Maybe you're thinking of employees and their unenforceable non-compete clauses trying to prevent them working for competitors in California. That doesn't apply to the owners selling their businesses.
  - Spooky23 10y ago
    Usually a non-compete like that is geographically boxed. When you're selling a business, you're selling the future. If you sell your furniture business, then turn around and open up a store down the road, you're attacking the ROI that you projected going forward and the buyer acted upon in good faith. Sketchy. Employees are a different matter, as it's a one-sided arrangement where the employee has little bargaining power. Small businesses are different -- both parties are free agents.
- tim333 10y ago
  I don't think she 'tricked Buffett' on the deal. She started the competing business in anger after arguing with members of her family about running the main business. Dunno about the ethics. It worked out pretty good for Buffett in the end. He bought NFM for $80m and last year the Dallas branch alone did $750m in sales.
ovulator 10y ago
Nebraska Furniture Mart is such a weird anomaly. You hear of the local places being run out of town by all the national big chains, but the national big chains can't compete with Nebraska Furniture Mart locally, and the ones than spring up around it, shortly die off.
- tim333 10y ago
  It's not that weird. It wins by having bigger stores, lower costs and lower prices than anyone including the national chains.
aantix 10y ago
"Mrs. B." was a total hustler (in a good sense). I grew up going to NFM. We were once there to buy carpet; she's wheeled up to us in her cart (she had to be 80+ at the time), nearly hit my little sister and basically said "what price do you need to purchase this carpet today?". She was famous for running the sales floor, even though she could have long retired prior.

verelo 10y ago

From the article: financial questions “are easy,” as Buffett says. “It’s the human problems that are the tough ones.” Preach. The more I 'practice business' the more I come to appreciate that the only thing out of your control are people (and that's probably a good thing). Everything else you can structure some kind of deal to resolve, but people are emotional, untrusting, illogical and often good at hiding their true motives.

valuearb 10y ago
I think Buffett would say not just people, but you are emotional, untrusting, illogical and good at hiding your motives from yourself. Thats why he preaches about how you live your life affects the quality of your decisions. He's not on Wall Street for a reason, living in Nebraska shields him from a lot of superfluous nonsense and allows him to focus on factual analysis and decisions.

tdk 10y ago

OT, but it's annoying the way The New Yorker writes cooperation 'coöperation' (ditto 'reëlect'). There's zero justification for this, etymologically or orthographically, it's just pure pretension.

roter 10y ago
There is a fair bit of background with the diaeresis at the New Yorker [0]. [0] http://www.newyorker.com/culture/culture-desk/the-curse-of-the-diaeresis http://www.newyorker.com/culture/culture-desk/the-curse-of-t...
ant6n 10y ago
Oh it's total pretension, but there _is_ justification for this. The diaeresis separates out the second vowel. It's pronounced not "rehlect" but "re-elect".
stephancoral 10y ago
Lol typical hacker news blowhard going off on something they have no idea about . "Orthographically" speaking there IS a justification and you would've found it if you spent three seconds of effort: diaeresis ‎(plural diaereses) 1. (orthography) A diacritic ( ¨ ) placed over a vowel letter (especially the second of two consecutive ones) indicating that it is sounded separately, usually forming a distinct syllable, as in the English words naïve, Noël and Brontë, the French haïr and the Dutch ruïne. It makes perfect sense to use the diacritic in this way and it is part of their style guide, has been for some time. You couldn't even spend the time researching what you're complaining about. Talk about pretension.
- jazzyk 10y ago
  Factually correct. Still pretentious :-)
- tdk 10y ago
  I'm well aware it's a diaeresis, and that it's part of their house style. That's exactly what I'm objecting to. The diaeresis is obsolete modern English (with rare exceptions) and putting it in interrupts the flow of reading. There is no excuse for it in 'cooperation', and only the only reason they do it is in order to show off they know about it - IOW pretension.

mbillie1 10y ago

This is just rich-people worship. What this has to do with tech, other than that a bunch of tech people also worship the rich, is beyond me. Pass.

backordr 10y ago
It's not so much rich-people worship as it is about observing another individual who happened to become one of the richest people in the world. We can learn a lot from each other - being ignorant of the person next to you is a dangerous habit.
- floopidydoopidy 10y ago
  We can learn a lot from a cross section of our entire population. From one man, we can learn about rich person worship and life lotteries.
  - deleted 10y ago
    [deleted]
  - valuearb 10y ago
    You should read some of Buffett's voluminous writings. There is nothing like a lottery going on, he's the most skilled investor the world has ever created. In his twenties and thirties he ran the Buffett Partnerships and averaged around 35% a year returns, over 13 or 14 years, beating the market by a massive amount. He retired around age 40, then bored went back to full time work running a company he controlled, Berkshire Hathaway. At one point he had beaten the market all but a couple of 50 years. In his shareholder letters he describes very clearly how he does it. Its a combination of being an excellent value investor, understanding which companies have competitive moats, and working very hard at reducing negative psychological biases. We can't be as good as investor as WEB, but reading and understanding his shareholder letters will make you a much better one in anything you do (buying a house, car, etc), and understanding the psychological biases that drive you to bad investing decisions can be applied in many areas.

nappy-doo 10y ago

I've been a longtime Buffett follower. I haven't seen the HBO documentary yet but am looking forward to it. I would recommend Buffett's authorized biography "The Snowball" by Alice Schroeder. Before writing it, WB told AS that if she got different stories from different tellers to go with the one that was least flattering to WB. Since it was written, WB hasn't denounced the book, but has broken off what were cordial ties with the author. Speculation abounds, but mostly it's because she hints that Susie wasn't entirely faithful to Buffett when she left Omaha and moved to California. (She never comes out and says it, but it's implied.) In any case, it's an excellent book, and the one written with the most access to Buffett and his notes.

dharmon 10y ago
Alice Schroeder did a small AMA on reddit years ago that is worth reading. When asked about their broken-off relationship, she says that they aren't unfriendly or anything, but that she is basically no longer in his inner circle. Her explanation is that he figuratively laid himself bare before her for the book, which was necessary for it, but that it made things afterward quite awkward. Kind of like seeing a close friend naked. Second the recommendation for that book. I like it better than the Lowenstein book, but any Buffett-head should read both, of course, as each has some details the other doesn't. I was also confused about the implications around Susie and just assumed that she had an affair with the tennis coach guy, as cliche as that sounds. Edit: Dug out the AMA. Definitely read if you are a fan of Buffett / The Snowball. https://www.reddit.com/r/investing/comments/2550vq/hi_im_alice_schroeder_author_of_the_snowball/ https://www.reddit.com/r/investing/comments/2550vq/hi_im_ali...
davidw 10y ago
I'd highly recommend the book too - it's an interesting portrait. I had superficially thought 'boring business guy', but there's more to it than that.
- tim333 10y ago
  I found it a bit slow and think Lowenstein is a better read https://www.amazon.co.uk/Buffett-American-Capitalist-Roger-Lowenstein/dp/0385484917/ref=sr_1_1?s=books&ie=UTF8&qid=1485992215&sr=1-1&keywords=warren+buffett+lowenstein https://www.amazon.co.uk/Buffett-American-Capitalist-Roger-L...

valuearb 10y ago

Lots of investors understand how to value companies, far fewer actually apply it regularly. I'm always amused when some Wall Street advisor discusses a businesses cash flow and growth rate using terms from his valuation courses, then starts talking about market sentiment and concludes by analyzing it's chart. It's like a physicist laying out the math perfectly for an orbital launch, but then starts analyzing launch times using Astrology. Very, very few investors apply valuation methodologies so well they they become true value investors, the name is really a marketing label for most funds. One necessary part of being a value investor that Buffett harps on in his letters is psychology, the ability to avoid bias in order to make decisions and not undo them in a panic. He works really hard to insulate himself from irrational fears, and focus on known facts. For example, he tries to never know what a company's stock trades at when he reads their annual reports and start making his own estimate of it's value. If it's a great company and it's trading for $100, he doesn't want to be subconsciously biased to raising his valuation estimate just to justify buying it. There is a great story from his partnership days. His partners were told up front he'd never discuss what they were invested in, he didn't want anyone front-running his trades at hurting the partnerships results. But one day during a market tumble a partner rushes in and demands to know if Buffett had invested in certain stocks that had crumbled. Warren just buzzes his secretary, asks how much the partner's share was worth, and told her to write him a check for that amount, and told the guy you're out. He wasn't going to panic. He wasn't going to let others try to panic him.

nabla9 10y ago
(disclaimer: I say this as someone who's has invested into Berkshire Hathaway) Buffet's success is only partly his ability to value companies and buy them at good price. He is good at that, no doubt, but it's just half of the story. The real genius is the way Buffet has structured his business to give him permanent advantage. The core of Berkshire Hathaway is the insurance business, GEICO and Berkshire Reinsurance. These companies are very profitable and generate huge cash inflow. This cash is cheaper compared to what other investors get trough financial sector. Especially when times are tough and money is tight. When other investors must sell something they own or get expensive loan, Buffet is drowning in cash and looking ways to spend it. Someone who is just as good at valuing companies starts several percentage points behind Buffet when they scramble to finance their acquisition.

brilliantcode 10y ago

I've figured out how to produce returns using cash secured or naked option strategies utilizing informational asymmetry gained from rigorous analysis of corporate Q's and K's that will actually generate wealth not slowly build it like value investing does. This critical edge that has been hiding in plain sight but validated by actual large funds using the same methods. Someday, newyorker.com and HN will be reading how a "Korean Canadian stock whiz turns his $50,000 CAD tax free savings account into $50,000,000 CAD" edit: due to downvotes I will not be revealing this prized strategy.

corybrown 10y ago
Hope it works out for you, best of luck!
acedinlowball 10y ago
I use the same technique. It has been working very well for me so far. I'm not rich, but lets say I will never have to worry about money again for the rest of my life, and neither will my descendants for the next 6 generations.
ryankennedyio 10y ago
The downvotes say it all, but don't ever write naked options. The strategy has positive expectancy, except every few years you lose >100% of capital, since the risk is almost unbounded.
- sokoloff 10y ago
  I write naked puts almost every week. It's about the only way I buy highly liquid tech stocks nowadays. The risk is absolutely bounded, of course (and similar to buying a stock outright). Naked options are not the problem; naked calls are, of course, far more risky and most investors are barred from writing naked calls on individual issues.
- brilliantcode 10y ago
  I never write options. cash secured put/call options are buying not selling options.

taivare 10y ago

I find some of his dealings disturbing. https://www.publicintegrity.org/2015/04/03/17024/warren-buffetts-mobile-home-empire-preys-poor https://www.publicintegrity.org/2015/04/03/17024/warren-buff... On a personal level he took over a local manufacturing co. in the city I live in. My former neighbor was working there when he took over the company. In a press release he said he was pleased with managements performance at the company and they should continue to operate as they were. My neighbor in his early 60's was worked 7 days a week , 11 to 12 hr. days. It was apparent they were trying to force him out. They accomplished their goal , he had a stroke on the job and died a few days later. I agree Warren was not responsible personally , I don't know where the buck stops. I lost a good neighbor soon after his dog passed.

valuearb 10y ago
Sounds like you have a problem with the owners/managers, not Warren. Do you really think he came all the way from Nebraska to point out your neighbor and tell management to work him to death? Warren is notoriously hands off with the businesses he buys. He typically buys them because they are well run and he doesn't have time to fix anything.
- taivare 10y ago
  By took over I meant he bought the company. If you read the bottom of my comment . . ( I agree Warren was not responsible personally , I don't know where the buck stops. )