Spero Consulting

We were surf­ing the web this morn­ing, and found this very nice analy­sis of War­ren Buf­fet at Yahoo Finance: Down $16 Bil­lion — Has War­ren Buf­fett Lost His Touch?

It’s well-​balanced and well-​written, but the author, Simon Maier­hofer, notes that the last two months of real­ity have not been very kind to Mr. Buffett.

We’re not into hero wor­ship; so, we could never under­stand the fas­ci­na­tion with Mr. Buf­fett (or any­one else for that matter).

We under­stand that the busi­ness media focus on per­son­al­i­ties as they are much more inter­est­ing than writ­ing about finan­cial state­ments, eco­nom­ics, and sta­tis­tics but not nec­es­sar­ily inter­est­ing in an absolute sense.

We’ve often viewed the large busi­ness mag­a­zines as the cor­po­rate equiv­a­lents of Peo­ple, US, and the star-​obsessed rags. (We view it as a good thing that we don’t know their titles.) In fact, in June – a mere three months before Lehman’s bank­ruptcy – we teased The Wall Street Jour­nal for fix­at­ing on then-​CFO Erin Callan’s wardrobe rather on Lehman’s losses and risks.

Now, we much pre­fer Jimmy to War­ren and would argue that the one has been lucky, writes pithy lyrics, and can play music, and the other has been, well, lucky.

We’re not sure which of the two has been luck­ier because we’re not sure who’s hap­pier or has been more ben­e­fi­cial to soci­ety and the world. Although we’ve derived much more per­sonal sat­is­fac­tion lis­ten­ing to Jimmy than read­ing about Warren, we’re not sure which met­ric to apply to the broader population. For soci­ety as a whole, it’s impor­tant to note that Jimmy does enter­tain, but he also leaves a dis­gust­ing trail of drunken (and pos­si­bly embar­rassed) baby-​boomers wher­ever he vis­its. So, how those ben­e­fits and costs should be weighed and net­ted is unclear.

Our phi­los­o­phy about star investors has been influ­ences by admon­ish­ments of that star musi­cian and lyri­cist, Bruce Spring­steen, and that star trader-​philosopher, Nas­sim Nicholas Taleb.

Spring­steen wrote about self-​reliance in Thun­der Road, as in don’t “…waste your sum­mer pray­ing in vain for a sav­ior to rise from these streets…”

In his book Fooled By Ran­dom­ness, Taleb wrote – and we are para­phras­ing and greatly sim­pli­fy­ing – that with a large enough start­ing pop­u­la­tion of ran­dom traders, one of them is likely to be extremely lucky in the rel­a­tive long-​run. In our observed real­iza­tion of the world (in the late 20^th and early 21^st centuries), that per­son seems to be War­ren Buffett. As one should be able to deduce from Taleb’s book’s title, much of it involves dis­tin­guish­ing between luck and abil­ity and crit­i­ciz­ing those who con­fuse the two, par­tic­u­larly those who have had a mod­icum of suc­cess and attribute that suc­cess to their own innate abil­i­ties rather than Lady For­tuna. Taleb then dis­cusses how inflated (and con­flated?) egos often then “blow-up” by los­ing more in one trade or strat­egy than they made cumu­la­tively. We wish him no ill will; so, we hope Mr. Buffett’s luck holds.

But enough about the Buf­fett boys. We say, “BWAM?”