All Roads Lead to Omaha
The Week in Review
By
Jerry Thomas (TMF Cheeze)
February 23, 2001
Greetings, Fools.
My mind has been on Berkshire Hathaway (NYSE: BRK.A) a lot this week, mainly because one of my assignments was to write the Bull Argument for this week's Dueling Fools feature.
This is only the second time I've written for Dueling Fools -- frankly, I find it a bit awkward to completely advocate one side or another on any particular stock. Elvis Presley's admonition notwithstanding, I think a suspicious mind is helpful when investing, and if you are ever wholly sold on one side of an argument or another, perhaps it's time to pull out your casebook and reexamine your thoughts. Besides, I had the easy side of the debate -- Berkshire Hathaway is one of the most impressive American companies of the last fifty years, and Rick Aristotle Munarriz (TMF Edible) had a much tougher challenge in mustering a case for the bearish take.
Whitney Tilson, too, invokes Berkshire's name in his Tuesday Fool on the Hill commentary. Warren Buffett, the venerated CEO of the company, has made "value" his watchword in his decades of investing, and Whitney devotes his column to an examination of that important concept.
So-called "value" stocks -- as opposed to the more glamorous tech stocks that had been the outstanding performers in the years prior to 2000 -- have been the stars of the market in recent months, prompting Buffett's appearance, once again, on national finance magazine covers, after a season of doubt had left people wondering if Buffett had lost his touch. I'm hoping that "value" is not merely the latest market fad, and that investors strive to understand the concept, and make it a watchword of their own. I know that I've been trying to do that.
It requires study, however. And a commitment to knowing where the limits of your understanding exist. And that's not always easy.
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Reference to Berkshire, too, appears in Rob Landley's series on How Companies Evolve. Rob looks at concepts explained in author Robert Cringely's book Accidental Empires, which describes the stages businesses go through as they are born, expand, find their place in the world, and either sustain themselves or decline.
Berkshire, in this case, is used as an example of a success story, and it's hard to think of a more quintessential success. When a company that trades for a few dollars a share in the 1960s reaches $70,000 in trading today, it's not at all surprising that Berkshire, and Buffett, have become icons for the best of what capitalism can be. But I think that there is danger in that iconography.
The danger is that, in admiring Buffett, we fail to learn to think for ourselves. The danger is that we might decide that the mere ownership of a Berkshire share entitles us to feel smug in our own sense of ourselves, as if the mere act of associating with an aura genius gives us license to imagine halos above our own heads.
The truth, unfortunately, is that if insight could be purchased along with a stock certificate, we'd all be billionaires already. To own Berkshire Hathaway, or to identify with the methods or values of Warren Buffett, or to sit at the master's feet and repeat all of his pithy phrases, is simply not enough to make us worthy of whatever respect we pay to those who have been successful.
I try to remind myself of that, even as I study what I can from Buffett, and even as so many people, Fools included, rightfully note the achievements of Buffett and his company as examples that should be emulated. It's easy to know what success looks like when you see it -- any spectator can watch Sammy Sosa hit a home run. The trick is knowing how to create that kind of success for yourself.
And that's the point where Folly begins. Everything we do is in some way intended as a resource for you to advance your understanding of investing or managing money. Maybe you listen to The Motley Fool Radio Show in your city. Maybe you read the weekly Fool Newspaper Column. Maybe, too, you're considering how helpful it might be to join our Couples and Cash Online Seminar. Whatever you're up to, in some way I hope that at least in some part of your mind you're looking toward greater mastery of your own financial situation.
When so much of our petty troubles in life focus on money, it seems that mastering these problems would settle a great deal of the strife we face from day to day. So many of us feel lost when it comes to money, and so much of that confusion is unnecessary, when the basic formula for advancing ourselves financially is so simple. The formula is exactly the same one that Buffett himself would endorse: Spend less than you earn. Invest the rest for the highest rate of safe return you can manage. And protect what you have acquired along the way.
All of the rest of the art of money management is simply an elaboration of these few, very elementary ideas. Point being, if you want to find your own road to Omaha, where Warren Buffett makes his home and where you'll find the headquarters of Berkshire Hathaway, perhaps you're better off making an Omaha of your own life. Let the world build its own roads to you, just as we've all built our roads to Buffett, making it so easy for us to turn to him as a shorthand symbol for investment success.
The stock markets have been troubling lately, going down, mostly, instead of up, which is the direction we'd rather see them moving. If these developments have you worried, spend some time with a couple of features we have for you.
One is something we're calling our Market Downturn Special, where we collect a number of articles designed to make these nasty but inevitable moments more tolerable. The other is Wednesday's Fool on the Hill commentary by Bill Mann (TMF Otter), who muses how completely the world can turn in the space of a year, and how especially frustrating such turns can be for the likes of Alan Greenspan and the rest of the members of the Federal Reserve.
Until next week,
Fool on!
Cheeze
Jerry Thomas lives in Alexandria, Virginia, and writes for The Motley Fool. He owns none of the stocks mentioned in this article -- but it's okay to read the Fool Disclosure Statement anyway. Honest -- we won't mind at all.
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