Warren Buffett is dangerous.
Yeah, you heard me. The Oracle of Omaha is flat-out dangerous. He's the investing version of MTV's Jackass: in dire need of a warning for people not to try this at home.
You wanna know why you shouldn't try it at home? Because you're not Warren Buffett, that's why.
And it's just getting worse. Buffett's problem is that he's so successful, so folksy-quotable, so accessible that he's everywhere. Even (mostly, I'm sure) on stuff he'd want nothing to do with.
60 years preparing for 30 minutes
Warren Buffett is famous, legendary in fact, for his ability to make quick decisions for capital deployment based upon his reading of the owners of the companies. This happened most recently with Clayton Homes (NYSE:CMH), the Tennessee-based manufactured-home builder. Buffett reads old man Clayton's autobiography, Buffett's impressed. Buffett calls, Buffett buys, without so much as ever setting foot in Eastern Tennessee. Easy-peasy.
Don't believe it for a second.
Oh, sure, the transaction went about just like that. If the deal did take a wee bit longer than that -- and if the Clayton folks were a little bit more vexing in their negotiations than that -- you'd never hear about it from him. But it is in no way safe for folks to try to emulate this part of Buffett's decision-making process. Because we're not him.
A lady once remarked to a virtuoso pianist after one of his concerts, "I'd give anything to be able to play like you." He responded simply, " I did give up everything to play like I do."
The reason Warren Buffett can take a half-hour and decide to buy a billion-dollar company is that he has spent a lifetime perfecting the art of capital allocation. Further, the man reads. He reads financial statements, constantly. He reads philosophy, he reads financial books, he spends inordinate amounts of time just thinking. So when he speaks of Berkshire Hathaway's (NYSE:BRK.A) corporate culture as being one of inactivity bordering on sloth, don't believe it for a second. Berkshire Hathaway headquarters is more like a financial dojo, where the sensei considers his art for months and years on end, preparing for those rarer occasions when he'd have to use it.
And let's also face it -- the man's got an innate knack. By comparison, here in Washington, D.C., we just witnessed perhaps the first professional failure of Michael Jordan's illustrious basketball career. Having accomplished more than anyone else on a basketball court, he took over as head of basketball operations for our local sad-sack NBA team, the Washington Wizards. What he subsequently learned of the players that he picked to revive hoops in Washington was this: They weren't him. They couldn't move like him, they couldn't think like him, they couldn't perceive like him.
It is the same with Warren Buffett. He'd have an easier time teaching you how to breathe nitrogen than how to invest like him. It would require you to be him.
Got quote?
Which is why the man's a menace. Spend any time on any financial website and you'll find ads offering services to "teach you to trade like Warren Buffett." There are books, screening engines, and expensive courses, all of which use the man's name or the man's quotes to push a bunch of crap that doesn't even come close to getting into the core fact that "Buffett" cannot be taught.
My Russian friends tell me that growing up it was really easy to do well on papers in school. Every paper they ever wrote went "blah blah blah blah Lenin quote blah blah blah blah Lenin quote blah blah blah Lenin quote," and so on. Didn't even have to be relevant quotes from old Vladimir Ilich, just as long as they were there.
Just the same, it seems that with almost any investing article you see, the default is to go find a quote from Buffett that fits (me: guilty as charged). Which is fine -- the wealth of information and knowledge that he gives in his Chairman's Letters is immense. But (a) it's not like there aren't some other pretty brilliant investment minds out there, and (b) some people use Buffett quotes to illustrate points with which he himself would never agree. I've seen his words pitching technical trading platforms, mechanical methodologies, momentum buying, diversification, and the designated hitter rule; in actuality, it's pretty clear that he feels contempt for all of them. OK, I'm guessing on the DH thing, but it would be consistent.
That's all I'm saying here. Nothing is as easy as Warren Buffett says it is, because he's practiced within his area of expertise for years, and he thinks about it almost every second. And oh, yeah, he's a natural at it and you're not. By the way, neither are those rafts of investment advisors who can't seem to help but use the word "Buffett" within the first paragraph or so of their investment literature. Bright folks, many of them. Brilliant in fact, and many absolutely, positively adhere to rock-solid investment principles, ones which you-know-who would undoubtedly approve.
But they're not him. And there's a 99.999% chance that as hard as he has had to work to get where he is, they would have to work much, much harder.
As for the rest, when you see Buffett used in an advertisement, do yourself and all of us (and most likely Warren himself) a big favor: Ignore it. This pervasive behavior has gone on so long because it has worked. "Blah blah blah Buffett quote" just isn't good enough reason for you to part with your money, for some cockeyed "service" put on by a group of folks who aren't rich, either.
Just say no.
Bill Mann, TMFOtter on the Fool Discussion Boards
Yeah, I'm not him, either. Bill Mann owns and has beneficial interest in Berkshire Hathaway. The Motley Fool is investors writing for investors .
