The Greatest Investor Who Ever Lived
“A feast is made for laughter, wine makes life merry, and money is the answer for everything."
Who is the greatest investor¹ who ever lived?
Well, the arbiters of money can certainly discuss the question: George Soros, Jim Simons, Peter Lynch, and Seth Klarman come to mind. But the correct answer (with the possible exception of J.P. Morgan, Sr.) is Warren Buffett.
After reviewing the performance of my portfolio in 2022, I realized that while -9% was better than the S&P 500's -18%, it was still nothing to write home about. Past history made me realize that walking in the footsteps of the Oracle of Omaha would be a more effective way to improve my 2023 results, than reading the great books on investing, buying dividend stocks, or spending even more time analyzing potential investments.
Prior to my pilgrimage to Omaha, I re-read The Snowball: Warren Buffett and the Business of Life², in an effort to understand the man, his investing techniques, and most importantly his haunts (and eating habits). The details of my pilgrimage can be perused here, but they only confirmed what I learned in the book: investment riches cannot be obtained by reading a book.
Buffett was originally an acolyte of Benjamin Graham, the co-author of perhaps the greatest investing book of all time, Security Analysis. This humbly titled tome, espoused the Grahamesque investment philosophy of buying cigar buts, stock in companies that are worth more dead than alive enabling the investor to get one last puff prior to being discarded. Buffett then graduated to his own philosophy (heavily influenced by fellow traveler and friend Charlie Munger) of buying undervalued companies with strong potential for growth and investing in them for the long term. Companies with a durable competitive advantage, such as a strong brand, high barriers to entry, or a large and loyal customer base, and buying in at a price that provides a margin of safety.
While reading about these techniques and Buffett's investment success may help make you become a better investor, the road to investment riches is not that simple. One reason is that you will still not be Warren Buffett and have all of his personal foibles, peculiarities, and eccentricities. Quite simply Buffett's investing success must be at least partially attributed to his idiosyncratic personality:
While he wasn't an absentee father, he was close to it.
Regimented personality - the man lives on the same street where he works.
A narcissistic bent: He once built an enormous train set in his house but would not allow his children to play with it. He and his wife once joined a "gourmet group" where Buffett "would politely ask each month's hostess to make him a hamburger." At black tie events given by Katherine Graham (the owner of the Washington Post), he would ask that he be served a hamburger and a Cherry Coke instead of the muti-course dinner and paired wines provided to every other guest.
Bruce Springsteen once said the road to greatness starts with one parent who thinks you can do no wrong and another who thinks you can do no right. Well Buffett's father while being a somewhat detached 1930s father, was quite supportive and proud of his son, while his mother tormented and mentally abused him. It became so bad that as an adult he could barely stand to be around her, and would often leave the Thanksgiving table, plate in hand, to review potential investments in his office. After his father died, Warren placed a large portrait of his father Howard directly behind his desk, strikingly visible to all visitors (while never speaking of his mother).
Eating habits are as childlike as they are inflexible. McDonalds for breakfast every day (with his wife laying out the exact amount of cash and change required). Five cherry cokes a day (minimum). Steak and hamburgers (but no green vegetables), with a root beer float for dessert. He enjoys candy so much that he bought a candy company.
Singular focus on money. As a boy, he was consumed with collecting things like bottle caps, stamps, and coins - his favorite toy was a change maker. As a man, this translated into collecting money. I really don't think it is about having the most to prove he is the best, it's more that he just really likes the stuff. Trust me I like it too (just ask my wife), and it may have negatively affected my character, but it is nothing like Buffett's utter absorption with it.
All these traits made the man the investor he is today. I don't think you can take the investing style out of the man, they are intertwined like the two polynucleotide chains that coil around each other, and that literally form his DNA. He is quite simply an unstoppable machine, much like the Terminator. If the devil made me a bargain to accept all of these "traits," to become the greatest investor who ever lived, I don't think I would accept (though if I only had to accept a few of them . . .).
Part of the Buffett "charm" is to take guests who have traveled all the way to Omaha to "kiss his ring" to visit a . . . candy store, specifically Hollywood Candy in the Old Market neighborhood. It's well over 10,000 sq. ft. of candy, old records, pinball machines, old signage, memorabilia, and other symbols of a bygone time.
It may have something to do with Buffett's aforementioned love of candy or his desire to live in the past. I though think it has more to do with Buffett taking his guests where he wants to go (and not necessarily where they want to).
Hollywood Candy (author on right)
As I stood in the Oracle's footsteps reviewing shelf after shelf of candy, much of which I have not eaten since I was eight, I realized doing only what you want to do . . . all day . . . every day . . . may just be the secret to success.
¹ Note that I said "investor." Buffett is not a "stock picker," as a large portion of Berkshire Hathaway's investments are in wholly-owned companies like GEICO, General Re, Burlington Northern Santa Fe, Nevada Power Company, Precision Castparts, Lubrizol, Benjamin Moore, and Fruit of the Loom. In fact, the investment research company Value Line categorizes Berkshire Hathaway as an insurance company.
See "The 10 Greatest US Investors and the Virtues That Made Them," By Mark J. Higgins, CFA Institute, 03 May 2023
² The Snowball: Warren Buffett and the Business of Life by Alice Schroeder is one of the better biographies I've ever read. Made all the more remarkable as it's the only book she's ever written.
"Someone’s sitting in the shade today because someone planted a tree a long time ago."
• Warren Buffett
A sample of what Buffett's guests get to see when visiting Omaha