Thanks to Warren Buffett

I usually scarcely write lately, I am still too busy having fun building a house. Today was an exception. After reading a critical article about Warren Buffett I did comment on it. I prefer to post my last comment to that same article in this blog. So here we go…

“Thou shalt not bear false witness against thy neighbour.”

Thanks for providing me the inspiration to write. It is something I enjoy doing and you caused it. I will comment for the 2nd and probably the last time. You seem to have lost touch with reality and like negative attention, so maybe I am giving you pleasure too :).

I want to highlight and make sure that one of the many flaws in your reasoning does not go unnoticed.

Implying that Buffett trades on inside information based on a phone call you saw on a movie makes you lose objectivity and therefore credibility. Specially when you admit that you have no idea what they talked about in that call shown in the movie. In that case you should not imply false things unless you want to look bad. Defending and hanging on to that idea makes you look fool. Some, like me, might start to think you are a conspiracy theory freak.

I cannot provide you a link to the transcript of Buffett’s phone conversation nor know what he talked about. That’s precisely why I would not imply anything bad about it. I guess any healthy person should not make up and spread an insider trading accusation based on scarce unproven information. As I see it you basically imply Buffett is an insider trader because you think it’s a too big coincidence that Wells Fargo is his biggest position and that he received a phone call from a top government official. Implying insider trades with no proof portraits you as an uglier human being than the image you try to unsuccessfully spread of Buffett. That alone makes me lose respect on all your other arguments, like the one where you imply that Buffett was forced to work as a child. That last one is comic, you made me laugh there :). With your criticisms you are likely achieving the opposite of what you want.

Anyways back to Wells Fargo: Buffett had bought the biggest amount of Wells Fargo years before 2008/2009 and anyone who studied well Buffett knows he loves that company since already decades. He said that it would be the one and only company he would buy if he had to chose only one stock. Is it strange that being a focused investor he has a lot of it ?

I also, like you, did never receive a phone call from Paulson but probably unlike you I did buy (thanks god !) the biggest amount of Wells Fargo in 2008/2009/2010. Why did I buy it ? Because I thought it was cheap. I guess Buffet, knowing the company probably way better than me, thought the same and he added to his positions. It never occurred to me that he was insider trading, certainly not after watching the movie you mention. It’s also funny the kind of sources you use to make up your accusations :).

As I see it you seem to love to draw negative criticisms and chose Buffett, exactly the opposite kind of person, in order to get them. But alas your arguments seem to have a small amount of objectivity. I would take an honest look at myself if I was in your skin in order to avoid losing touch with reality.

Disclosure:

I love Buffett and owe a lot to him so maybe I am not considered too objective defending him. I think that learning about Buffett and understanding the way he thinks about investing made me as wealthy as I wanted. Like David Hume, one of my heroes, I believe that a man is made up of the ideas he has in his head and having the same ideas to another human being makes you quite similar, if not identical, except phisically, to him. That’s why when I had less money and wanted more I chose to be like the person I thought was one of the best investors. I chose Buffett. I studied all I could about him. I wanted to think like him and therefore spot opportunities like he did. In a few years of study, when my ideas, and therefore myself, changed, I started making money. It all was natural. Buffett taught me how to fish. I now, thanks to him, have enough to be financially independent and stopped working at 38. I could not be happier.

I am also long Wells Fargo being my biggest portfolio holding: http://www.kuchita.com/view/sumo.php

PD: For more about how David Hume thinks about the nature of human beings read his great book A treatise on Human Nature. Probably one of the best books I’ve ever read, and he started writing that master work when he was only 16 ! Isn’t that incredibly mature and intelligent ?!

Best !
jrv

About jrv

I was born in Spain and lived in Belgium, Chile, France, USA, Argentina among other places. Currently I am trying to settle down in a wild place. I am "retired", even though now I dedicate more hours "working" for my investments than I ever worked in the real labor market where I used to work in IT and Banking. I am a family man, I have a lovely wife, several sons and one step daughter. I have humble tastes, I like to stay home and read about companies and investments. I started investing at 25 before the internet bubble exploded. I did not know much about investing and liked technical analysis so my results were pretty bad. Fortunately I did not have much to lose. Some years later in 2006 bored of doing only real state investments and with quite a lot of money saved I opened an account in a cheap and excellent online broker and started again. This time I did not want to commit the same mistake, so I decided to follow a model. I heard that Warren Buffett was the best at making money via stocks so I started by reading a lot about him, all of his shareholders letters and several of the books that he recommended. I learned a lot, started applying his investing principles and reading a lot of 10K's. Digested news from lots of different sources. Basically I started buying very good and cheap companies and holding them for ever if possible and if nothing changed fundamentally. When the housing crisis started I was more than 75% cash. At that time I identified good companies at incredibly cheap prices so I invested most of my savings in stocks. In less than I year I doubled. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. My wife and I decided to change our lifestyle and moved from Belgium to the beach in a wild country. The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return but specially to move away from the inhuman life of civilization and to have finally some peace and sunny weather to concentrate better on investing. Now I can think and study about companies 60 hours a week and I am doing great. I can finally do what I want full time and can proudly say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! You can learn a bit more about my portfolio by viewing it at www.kuchita.com/view/sumo.php or you may learn more about me and my family by following the link "Author's site" from the menu above.
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One Response to Thanks to Warren Buffett

  1. Hieu says:

    Hi JRV,

    I admire you for your being humble, polite and tactful. I wish I was the same. My response to the author was not so tactful. Here’s a copy of my reply:

    This was such a useless article which has wasted 15 minutes of my life reading coupled with another 15 minutes responding. I’d have better luck trying to teach Calculus to my 6 yr old daughter than to educate this author about Berkshire.

    Warren is doing an excellent job of running this $300 Billion dollar company. There’s more to life & investing than just trying to beat the S&P 500 or DJI over a 5 year period (BTW – he beat both over 6 years). It’s all about risk management… Beta.

    Berkshire is the most diversified and conservative company in the world (relative to companies worth atleast US $100 Billion or more). One day, it will be worth US $1 Trillion (probably after the great man has gone). Personally, I don’t care about how Mr Market prices BRK over a 5 year rolling period.

    As a BRK shareholder, all that I am interested in is that Berkshire continues to buy great businesses (or stocks) with deep/wide moats at reasonable prices – with or without Warren.

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