An old article

[LC]

https://newrepublic.com/article/62975/the-temptation-st-warren

 

Written in 1992 by Michael Lewis, criticizing Warren Buffett.

 

It was an interesting read - I thought he made some decent points and other of his points he was making illogical jumps.

 

But I'm curious - to the board members who have accumulated more wisdom than I, what are your thoughts looking back on  this article, now 15 years later?

[Uccmal]

https://newrepublic.com/article/62975/the-temptation-st-warren

 

Written in 1992 by Michael Lewis, criticizing Warren Buffett.

 

It was an interesting read - I thought he made some decent points and other of his points he was making illogical jumps.

 

But I'm curious - to the board members who have accumulated more wisdom than I, what are your thoughts looking back on  this article, now 15 years later?

 

25 years later.  Lewis is a good writer.  He does tend to bend things to suit his thesis as he did with the Big Short. 

 

On the other hand Buffett has always carefully cultivated his folksy image to cover up his sheer ruthlessness.  No one becomes as rich and powerful as he is without being extremely shrewd.  There is nothing overtly dishonest going on, except he is lying to himself, which we all do. 

[cobafdek]

Imagine Buffett had died around the time that article was published.  (It would not have been unexpected given all those Cherry Cokes and Dilly Bars.)

 

In 1992, his net worth was approximately $4.4 billion, placing him at #8 on the Forbes list.  Had the Lewis article come out after his death, we might have had a dim view of Buffett's overall life.  He had been criticized at that time for being a stingy billionaire who made relatively meager pledges to charity.

 

By 2006, it was about $46 billion, and announced the gift to the Gates Foundation.  And of course it's still growing -- now $70+ billion. 

 

Arguably, decisions made during the Salomon years, and similar ones, allowed the 10-(and greater)-fold size of the charitable gift.

 

So, in 1992, should he have "impaired" his wealth-generating machine by acting more "moral" to satisfy Lewis and us?

 

Philosophers and children are good at coming up with ethical rules that we all agree with.  We all talk about behaviors being objectively "good" and "bad," and pretty much think we know what they are, in the abstract.  People in real life find out that rules are abstractions, and that there are always trade-offs (benefits and costs), and outcomes and consequences.

 

(My filter for all this is Kurt Vonnegut's lecture on storytelling published in his semi-memoirs "A Man Without A Country."  Buffett's story could have ended in 1992. But it didn't.  As Vonnegut says, "The truth is, we know so little about life, we don't really know what the good news is and what the bad news is.")

 

 

 

 

[rb]

I find the article pretty pretty upsetting.... because I enjoy reading Michael Lewis. It's not a very good one. It reads like a snarky post on CoBF not so much as an article in a magazine.

 

Firstly, there are the flat wrong facts such as that Buffett recently became an arbitrageur. Buffett has always been an arbitrageur doing lots of "workouts". This was not something that was hard to find/confirm.

 

Then he talks about the sweet deal he got on the Salomon deal where his $700 million worth of convertible prefs were worth between $850 million and $1.2 billion at time of issue. Firstly, that's some mighty accurate valuation work for a "big swinging dick" bond salesman  ::). Secondly, he says that the difference was somehow unfairly charged to the Salomon shareholders. Really? He writes this article after the shit hit the fan at Solly. How much would those Solly shares be worth for the shareholders without Buffett there? I think that the shareholders actually got a rather good deal.

 

He proceeds to use his supreme authority to proclaim the EMT true:

The cult of the investment genius promoted by Buffett is part of the problem, and has real social costs. The belief that there is such a thing as stock-picking expertise helps financial charlatans everywhere to flourish and leads investors to assume unnecessary market risks."

I think that Berkshire shareholders would respectfully disagree. Anyway I don't think I need to continue to dispute this premise on CoBF.

 

I do believe that Buffett is a man of high integrity and he has a folksy persona (maybe real maybe not). He's also a shrewd and ruthless businessman. So what? But I think that this is what really bothers Lewis. He has a picture in his mind of successful people. And they look and behave like the people on the Salomon trading floor. So Buffett because he's successful must be like them and everything else is just a fake persona.

 

But this is just a prejudice. The idea that successful people look like Solly traders and if you're folksy and have integrity you have to be the patsy is just a caricature. I think that Buffett's greatest contribution to society is that he proved that you can have integrity and at the same time be wildly successful. But this seems to really, really bother some people.

 

Anyway, the article was written in early '92. Lewis was barely out of Solly. Maybe Buffett even fired some of his friends. Let's just say that maybe the subject was a little too close to home. Then we can go enjoy his next book cause the man can really tell a story.

 

Edit: Do you think that someone actively updates these articles? The picture at the top seems way more recent than 1992. Maybe circa 2014?

[Jurgis]

It's funny that people like Lewis ... until he disses the sacred cow Buffett ... and then he's wrong and snarky and should go write another book ... but hopefully not about Buffett.  ;D (Yeah, Lewis is smart and he did not write snarky book about Buffett - you've got to give it to him - the guy knows how to build his reputation rather than destroying it. And I've never liked Michael Lewis.)

 

A lot what Lewis said in this article is correct: Buffett has a lot of double standards. "I say X, but I do Y, but it's OK because I really meant XX and Y does not contradict it". Yes, rail against Wall Street, but invest into it and preserve the Wall Street behavior even at company (Solly) that he controls. Yes, rail against executive compensation, but never vote against it when on company boards. Yes, rail against derivatives, but it's OK to invest into and admire one of the biggest derivative cos. Anyway, there was already a thread on CoBF (or two or three) about these contradictions, so there's little point to repeat and list them all.

 

Some people still call Buffett a man of integrity. Well, me, I never understood what "integrity" means. And Buffett as an example does not help.

 

With that said, Buffett is human and is still likely better human being than a lot of investment/hedge fund managers and/or CEOs. He has done a lot of good and is still doing it. But that's again a conclusion of the other threads on Buffett topic @CoBF too...  8)

 

Edit: And, yes, Lewis was likely wrong about EMT and Buffett being coin throwing random fluke.

[Jurgis]

Edit: Do you think that someone actively updates these articles? The picture at the top seems way more recent than 1992. Maybe circa 2014?

 

OT.

If you keep scrolling down after the article, you'll notice that you get next article from 2017. So the answer is that picture/etc. are likely autogenerated together with the whole article/webpage. It's not your 1992 WWW anymore...  8)

[KinAlberta]

Imagine Buffett had died around the time that article was published.  (It would not have been unexpected given all those Cherry Cokes and Dilly Bars.)

 

In 1992, his net worth was approximately $4.4 billion, placing him at #8 on the Forbes list.  Had the Lewis article come out after his death, we might have had a dim view of Buffett's overall life.  He had been criticized at that time for being a stingy billionaire who made relatively meager pledges to charity.

 

By 2006, it was about $46 billion, and announced the gift to the Gates Foundation.  And of course it's still growing -- now $70+ billion. 

 

Arguably, decisions made during the Salomon years, and similar ones, allowed the 10-(and greater)-fold size of the charitable gift.

 

So, in 1992, should he have "impaired" his wealth-generating machine by acting more "moral" to satisfy Lewis and us?

 

Philosophers and children are good at coming up with ethical rules that we all agree with.  We all talk about behaviors being objectively "good" and "bad," and pretty much think we know what they are, in the abstract.  People in real life find out that rules are abstractions, and that there are always trade-offs (benefits and costs), and outcomes and consequences.

 

(My filter for all this is Kurt Vonnegut's lecture on storytelling published in his semi-memoirs "A Man Without A Country."  Buffett's story could have ended in 1992. But it didn't.  As Vonnegut says, "The truth is, we know so little about life, we don't really know what the good news is and what the bad news is.")

 

Well said. Thanks for the comments.

 

"theory and reality are only theoretically related" -Robert Grossblatt

 

"Love of theory is the root of all evil" - William M Briggs