Friday, October 19, 2012

Bad Religion

I don't like listening to or reading the writings of Warren Buffet just because he is rich and successful. I like to do so because when he speaks he makes so much goddamn sense. He doesn't have to rely on his name or personal brand for proof. The logic of his arguments, as plain and simple as they are, speak for themselves.

There's this whole precoccupation with mathematical formulas and accounting in investing. Both matter, but not infinitely so. If you get to reading related material, you'll find a lot of the math assumes infinite certainties that are anything but, and accounting can be, well, "creative" (they have entire books dedicated to "creative accounting," but not enough if you ask me; save for books written by authors outside the U.S. they mostly read the same).

Warren understands that, at a basic level, it's parts of the business and the way that it generates cash (along with a host of other fundamentals) that matters most. They drive the value of the business more than any accounting metrics or mathematical formulas could ever hope to.  Because if our current formulas or methods of accounting didn't exist, the business and the cash it generates still would, and the moving parts that make for the business would be what separated one business from another.

He boils a lot of things that we assume to be complicated down to common sense. And he gets there by thinking for himself.

But I love me some Charlie Munger. He's willing to plainly say everything Buffet won't.  He does not suffer fools easily, and it only makes him funnier than he already is.
His latest transcripted speech, at the Harvard-Westlake School, is pure Munger.

My favorite quote from the interview:

"They didn't understand it, but they could repeat it like a mantra from Buddhism."

Like I said. Pure Munger.