Many of you might have heard of the investment titan Warren Buffett. This 75 year old is the chairman and CEO of Berkshire Hathaway, Inc., a conglomerate company. There are several grades of shares for Berkshire. The class A shares mentioned here closed at a price of $90,500 per share. Why is this? A recent story in The Wall Street Journal sought to find out who Buffett is "unplugged." In that article, Susan Pulliam and Karen Richardson mention that the return on Berkshire's stock since 1951 has been 31 percent. The article was highly doubtful about the future of Berkshire in a post-Buffett world. It thought that Buffett is Berkshire Hathaway. Once the 75 year old decides he's had enough, the company will implode. What does your humble Heights business correspondent think? I think this is garbage. This is a clear case of the business press creating major issues that don't exist. To understand why, let me help clarify a little more about the man, myth, and legend. Buffett was a student of the famed investing giant Benjamin Graham. Graham wrote a famous book called The Intelligent Investor. I hear it discussed on CNBC all the time, fund managers and anchors are always referencing it as the "investing bible." If I wanted to succeed Buffett, I would definitely spend the approximately $30 to pick it up. As a side note, I would like to announce that I do own a copy of this book. It looks very compelling. Two years after my initial purchase of it, it makes a lovely bookend in my room in New York. I'm sure I'll read it eventually. It is a couple hundred pages of hardcore investment theory. Only purchase this book if you are really willing to get into it and split your brain in the process. The Wall Street Journal article talks about Buffett's office and staff. It says his staff isn't bigger than 17 people. He has no computer in his office. He has a TV constantly tuned to CNBC on mute and two phones to connect directly to his brokers. In a section talking about Buffett's investment record, it mentions that for more than 50 years he has had many successes. The Journal also mentions a case in 1998, when Buffett decided to buy NetJets, Inc. NetJets, for those who do not know, is a private jet leasing company. It maintains a fleet of executive jets in many major airports across the country. Members purchase time on a credit card type system. As they use their time, it is deducted from the credit card. Anyway, the company posted losses. The article also mentions that Buffett bought this company after a 20 minute meeting with its founder. These two factors - the Graham book and the NetJets story - point me to one simple conclusion. With proper instruction, Buffett will be able to mold a successor who will not run Berkshire into the ground. It seems like Buffett makes a lot of his decisions based on a company's fundamentals. I believe that too often the business press complicates life more than it helps. Hey, if there wasn't hearsay floating around, The Wall Street Journal would be one eight-page long section. Out of those eight pages, probably four would be advertisements. Part of the reason I think Buffett and Berkshire have been so successful is that they don't follow all the latest developments. He filters his exposure to information, so that he can think. The bottom line is independent thought will always beat hype journalism.
The Bottom Line: Buffett is billionaire recluse
Published: Monday, November 14, 2005
Updated: Saturday, November 14, 2009
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