The Multiplicity of Talents of Warren Buffett

A 2009 Pittsburgh Post-Gazette OpEd about Warren Buffet--still relevant 

OPINION / PERSPECTIVES

Sunday Forum: How Warren Buffett got rich

Rudolph H. Weingartner has a few thoughts on how to get from here to there

Sunday, August 16, 2009

Reading the wonderful biography of Warren Buffett by Alice Schroeder, "The Snowball: Warren Buffett and the Business of Life," got me to thinking about the different ways in which people have become really, really rich and how unusual Mr. Buffett is in that category.

The norm among the mega rich (let me pretend that there is such a norm) is that, above all, such a specimen knows one thing superbly well -- Rockefeller, oil; Carnegie, steel; Walton, retail; Gates, software -- on which his fortune rests. I am taking stick-to-it-ive-ness and luck for granted.

What this Buffett biography reveals is that its protagonist would never have made it into the firmament of the richest men of all time if he had lacked just one trait of quite a few that were necessary to his phenomenal success.

Let me state briefly of what Mr. Buffett's wealth consists: his dominant interest in a company, Berkshire Hathaway. While that outfit began life as a textile manufacturer, that activity has long since moved to other lands. Instead, B-H is a holding company that owns or has a significant stake in roughly four score companies, ranging from those that write insurance to others selling jewelry. Since Mr. Buffett took over B-H, it has gained flamboyantly in value and, until the recent time of troubles, its stock was always significantly ahead of the market. What Bernard Madoff falsely claimed, Warren Buffett, the Oracle of Omaha, did.

OK, that's the achievement. What did it take to accomplish it? Start with two gut traits, necessary for so much success. The first I call nose. It's my term for informed intuition, the ability to smell out what is plausible or more. Necessary but certainly not sufficient. Plausibility is not basis enough for the investment of millions. Needed for that is a trait that is in many ways antithetical to the immediacy of insight, namely analytical savviness, a certain brand of brain power. Antithetical because the exercise of that power takes a great deal of time and patience. On many occasions, the biographer Schroeder reports, the application of that ability converted Mr. Buffett into a virtual hermit, shut up in an office, reading and calculating.

This is not a trivial point. In general, if not inevitably, people who are brilliantly intuitive tend to go by the seat of their pants, hit or miss and, if good at it, hit more than miss. But Warren Buffett is not one to think that a major investment decision can be left to the gut, however much it may be the starting point. Laboriously, it is necessary to determine its actual value, a measure that is not revealed by the price of its stock, by gross sales or even by the profit its activities bring in. That value has to be dug out by delving deeply into its operations and assessment of its assets, together with a calculation as to what the company can become if its practices were modified. That's work, even drudgery; it requires plowing through irrelevancies to get to what is relevant. The intuitive Mr. Buffett is capable of squelching his gut and doing the work.

OK, again. What's next? Intuition acknowledged, laborious homework done, what does it take to act, where acting means allocating millions? This calls for that second gut trait: grit, the courage to go after an envisaged goal, obstacles and uncertainties to the contrary notwithstanding. Now taking risks is not a characteristic conventionally associated with the patient analysis of endless prose and numbers. The ability to act decisively is seldom found together with professorial studiousness. But what heightens the tension in Mr. Buffett's enterprise is that his findings are inevitably in conflict with conventional wisdom. Were that not so, the Oracle of Omaha would be just one of many bidding for a large slice of a company. Grit must take him to go against the grain.

The writing of a big check is not the end of the story. With his investment, Mr. Buffett gains authority, a power that must now be put to use. Since it has been determined that much more is possible for this company than it has so far been able to actualize -- promising an increased future value -- it must now change its ways. Almost always that requires that new people be put in charge, a crucial and possibly wrenching change. To effect such a transformation calls for two aptitudes, neither of which can be expected from a person who had locked himself up to delve into the books of the enterprise just garnered: the ability to fire -- not the most endearing trait and one that Mr. Buffett exercises with reluctance -- and the ability to hire. This crucial move calls for the knack of sizing up people for their skills and character, preceded by the humdrum work of surveying who's out there. How many people do you know who are good at either of those tasks, even where the stakes are much lower?

Finally, consider the context within which Mr. Buffett operates. You rub my back and I'll rub yours is one maxim that applies. But serving as the basis of all transactions, including relations with powerful governmental agencies, is trust. Mr. Buffett would not be one of the richest men on the globe if he were not universally regarded as truthful and honorable. In the long run, that reputation can be earned only by someone who actually is honest and upright.

It is not a mystery, looking at the traits and abilities that Warren Buffett possesses to a superlative degree, that he should have achieved so much. But as is true for so many outstanding players in history, it is a mystery how such a fortuitous bundle was packed into a single person.

Rudolph H. Weingartner is a professor emeritus of philosophy at the University of Pittsburgh (rudywein@comcast.net).