Warren Buffett on the relationship between journalism and investing

This week, a friend of mine encouraged me to listen to Warren Buffett’s 1992 conversation with the Omaha Press Club, given my background as a business reporter and some of Buffett’s comments about the close philosophical relationship between reporting and investing.

“Ninety percent of investing is assigning yourself the right story…” Buffett says. “The story always happens to be, ‘What is X worth?’ But that’s a story.” (I very much agree.) The whole conversation was excellent, and for those of you who have not heard the speech, I’d recommend it. Available here as a transcript.

“News people and I are in the same business. I go out and I try to report on a company. I try to evaluate its management. I try to value its competition, its product, its services, its prices, its cost, everything. I try to do a reportorial job on that business. I may never have heard of it before, and that is my job. I assign myself a story. Every morning when I come to work, it may be triggered by some event, but I assign myself a story. The story always happens to be what is X worth, but that’s a story.”

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Becoming a better learner, analyst, and investor

On a long drive yesterday I had the pleasure of listening to Alix Pasquet’s conversation with Frederik Gieschen about learning, research, network building, behavioral psychology, investment frameworks, book recommendations, and so much more. Alix Pasquet III is a former backgammon and poker player who is now the Managing Partner and portfolio manager at the hedge fund Prime Macaya. (“Prime” is a reference to “primes” in backgammon.)

I’m particularly intrigued by Alix’s passion for the process of learning itself, and how to apply those learnings into new behaviors, which he talks about in depth throughout this presentation. 

“You want to study great investors, CEOs and leaders, but again, be careful of hero worship. I think we often imagine these individuals have qualities or abilities that are better than anyone else’s. And some do. But mostly they’re schmucks like us. They have the same weaknesses, patterns, they self sabotage. And don’t think that they play perfectly. Very often, they also may have gotten lucky and have gone through a certain environment. Other times, they have support structures that we don’t see. You have to remember that you’re never going to be able to replicate what they’ve done. Mostly because we’re not going to go through the same environment that they went through.”

A few more links I enjoyed: 

Second Thoughts On Going Public (1977) – via Harvard Business Review (H/T Joe Frankenfield, Saga Partners)
“Now, however, the price of the stock became a chief management concern and almost the sole topic of discussion. All of us, myself included, underwent a change in the way we looked at our business. Where we had pursued single-mindedly whatever looked best for our long-range future, we began to be very conscious of the effect on short-term results. This was a fairly subtle phenomenon. It could affect a decision to open a larger number of accounts than we had previously planned. Or we might get into an additional price promotion to assure ourselves of extra volume. In sum, we began to run scared with one eye on short-term results.”
American workers need lots and lots of robots – via Noah Smith
“What’s happening is that companies that use more robots hire more humans (and retain their existing humans) in jobs that complement the robots. That’s exactly what we saw with previous waves of automation — people find new roles, robots increase their productivity, and they get paid more. Looking at the countries that use the most robots in their manufacturing industry, it seems likely that this virtuous cycle is happening even at the level of whole nations.”

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