Morality and "Value" Investing

[stahleyp]

A big, big reason I like value investing is that a lot of the main proponents have really good morals (Buffett, Watsa, Chou, Templeton, etc). Hopefully I'm speaking out of turn here, but I'm curious and I know many of you have a much deeper background than I do.

 

However, I've noticed that Buffett seems to be friends with people who don't have a ton of moral values, ie Ben Graham and, to a lesser extent baseball star Alex Rodriguez. If you read about Graham's personal life...it is pretty crazy. "A-rod" has admitted to steroid use and having an affair while married. So often Buffett will talk about corporate greed and all this other ethically gray stuff, but when it comes to his friends, does he give them a pass?

[ScottHall]

A big, big reason I like value investing is that a lot of the main proponents have really good morals (Buffett, Watsa, Chou, Templeton, etc). Hopefully I'm speaking out of turn here, but I'm curious and I know many of you have a much deeper background than I do.

 

However, I've noticed that Buffett seems to be friends with people who don't have a ton of moral values, ie Ben Graham and, to a lesser extent baseball star Alex Rodriguez. If you read about Graham's personal life...it is pretty crazy. "A-rod" has admitted to steroid use and having an affair while married. So often Buffett will talk about corporate greed and all this other ethically gray stuff, but when it comes to his friends, does he give them a pass?

 

I think you're confusing Buffett's personal life for his business life here. If you've read The Snowball, you'd see that Buffett has had a very ... interesting life. He was married, but his wife moved out west and set him up with Astrid Menks while they were still married, who more-or-less acted as his wife except for public ceremonies and the like. He did marry Astrid Menks after his wife died.

 

He used to steal gold balls from department stores when he was a child, and mostly neglected his family until recently because he was so focused on becoming very rich. I don't know if you'd consider that immoral or not, but it's certainly different.

 

I don't really care about his personal morals or anyone else's for that matter. The fact that a person is, for lack of a better word, a jerk in life does not detract from their accomplishments in business. Just look at Steve Jobs for the perfect example of that.

[stahleyp]

A big, big reason I like value investing is that a lot of the main proponents have really good morals (Buffett, Watsa, Chou, Templeton, etc). Hopefully I'm speaking out of turn here, but I'm curious and I know many of you have a much deeper background than I do.

 

However, I've noticed that Buffett seems to be friends with people who don't have a ton of moral values, ie Ben Graham and, to a lesser extent baseball star Alex Rodriguez. If you read about Graham's personal life...it is pretty crazy. "A-rod" has admitted to steroid use and having an affair while married. So often Buffett will talk about corporate greed and all this other ethically gray stuff, but when it comes to his friends, does he give them a pass?

 

I think you're confusing Buffett's personal life for his business life here. If you've read The Snowball, you'd see that Buffett has had a very ... interesting life. He was married, but his wife moved out west and set him up with Astrid Menks while they were still married, who more-or-less acted as his wife except for public ceremonies and the like. He did marry Astrid Menks after his wife died.

 

He used to steal gold balls from department stores when he was a child, and mostly neglected his family until recently because he was so focused on becoming very rich. I don't know if you'd consider that immoral or not, but it's certainly different.

 

I don't really care about his personal morals or anyone else's for that matter. The fact that a person is, for lack of a better word, a jerk in life does not detract from their accomplishments in business. Just look at Steve Jobs for the perfect example of that.

 

If he cheated on his wife, I would find that immoral. I didn't get the feeling that he did that though. Perhaps I'm biased, but it sounds like he was so consumed with his business that his wife went searching for other people.

 

From what I've read, he had a really bad childhood. He also had trouble connecting with his kids. It seems that he really, really tried though.

 

As far as stealing things as a child, I can't give him too much grief for that. Your brain and morals aren't really very developed at that time.

 

 

 

[ScottHall]

If he cheated on his wife, I would find that immoral. I didn't get the feeling that he did that though. Perhaps I'm biased, but it sounds like he was so consumed with his business that his wife went searching for other people.

 

From what I've read, he had a really bad childhood. He also had trouble connecting with his kids. It seems that he really, really tried though.

 

As far as stealing things as a child, I can't give him too much grief for that. Your brain and morals aren't really very developed at that time.

 

Good enough for me; it' not my place to judge what you find moral or not, I just wanted to see if you found stealing golf balls, etc. relevant.

 

I don't personally care, because there's a lot that can be learned about business and investing from studying Buffett, but it wouldn't surprise me if a lot of people would care. That's certainly their prerogative. Personal morals are something each man and woman needs to figure out for themselves, in my opinion.

[Parsad]

If he cheated on his wife, I would find that immoral. I didn't get the feeling that he did that though. Perhaps I'm biased, but it sounds like he was so consumed with his business that his wife went searching for other people.

 

According to "The Snowball", this is accurate.

 

In terms of the people he associates with, you have to remember he is as big a celebrity as people like A-Rod or LeBron James.  Alot of times, these people seek him out, and not the other way around.  I would also suggest that Buffett is a person who would prefer to add value to someones life and conduct, rather than avoid them altogether.  Cheers!

[Kraven]

If he cheated on his wife, I would find that immoral. I didn't get the feeling that he did that though. Perhaps I'm biased, but it sounds like he was so consumed with his business that his wife went searching for other people.

 

From what I've read, he had a really bad childhood. He also had trouble connecting with his kids. It seems that he really, really tried though.

 

As far as stealing things as a child, I can't give him too much grief for that. Your brain and morals aren't really very developed at that time.

 

It's certainly for each person to decide these types of issues.  Buffett's, or anyone else's for that matter, morals don't impact what I think of their business decisions, but I believe you are reaching in some of your justifications here.

 

Did Buffett cheat on his wife?  Depends on what you mean by cheating.  Susie "set him up" with Astrid, but if you think that he and Astrid lived under the same roof for 25 years and saved themselves for their eventual marriage, I think you are being naive.  Blaming his ability, or lack thereof, as a father on his childhood is also a stretch.  He had a normal childhood.  His father was a decent guy, his mother a nightmare, but it didn't strike me as so unusual. 

 

He wasn't a good father because . . . he wasn't a good father.  He only cared about money and neglected his children.  I know plenty of people who never see their kids except maybe a quick hello on the weekend as they are on their way to another meeting, the golf course, etc.  It's because their priorities are different. 

 

It's not for us to judge, but don't rationalize it.  Buffett was present in body (most of the time) for his children, but his mind was elsewhere.  That had nothing to do with his childhood.  He was also a big baby and wanted to be mothered himself.  As for his friendships with Arod, I am really not sure what that has to do with anything.  And Graham had tons of extra marital affairs, but in my view that doesn't seem to affect the words and ideas in Security Analysis and The Intelligent Investor.  To each his own.  But view it with open eyes.

[rmitz]

If he cheated on his wife, I would find that immoral. I didn't get the feeling that he did that though. Perhaps I'm biased, but it sounds like he was so consumed with his business that his wife went searching for other people.

 

According to "The Snowball", this is accurate.

 

In terms of the people he associates with, you have to remember he is as big a celebrity as people like A-Rod or LeBron James.  Alot of times, these people seek him out, and not the other way around.  I would also suggest that Buffett is a person who would prefer to add value to someones life and conduct, rather than avoid them altogether.  Cheers!

 

It isn't cheating if it's approved by all parties.  It sounded like a pretty basic poly relationship setup to me.

[Guest Dazel]

There is one line that got me about Buffett....his daughter susie was asked what her billionaire father liked to do.

She said "if he had his way he would be at home with us relaxing or reading a book."

 

That tells me a different story about Mr. Buffett than 99% of successful business people...most of their kids hate the their parents...was he emotionally unattached?!!!! Of course!Who the hell has perfect parents!!!!!give them a billion and the opportunity to do anything in the world...let's see if they want to stay home with their families and read a book....Not a chance!

 

Morals.....yes...all humans are flawed in some way...it is how we react to our mistakes is what counts. Buffett has made personal mistakes like the rest of us...but from my seat his morals and ethics are as high as anyone I have studied in business.

 

 

dazel.

[Liberty]

If we could all stay out of consenting adults' bedrooms, the world would be a much better place.

[stahleyp]

Sanj, very good point at adding values to others!

 

Kraven, did you read The Snowball? If anything, he didn't have a good childhood. His mother called him worthless and did all kinds of crazy things.

 

Susie set him up with Astrid after she left him. I don't consider that cheating. To me, for cheating to occur there needs to be a violation of trust. She seemed more than okay with it.

[Uccmal]

This is ludicrous.  Cheating on your wife = legal;

Cheating on your taxes = illegal;

 

I dont recall Buffett ever pontificating about how people live their personal lives.  He has advised people only to do things that make them happy and add to society.  He has advised his companies to stay above the line in terms of legality.

 

Lets ask Newt his opinion on what's moral, or amoral...... :o

[Guest Hester]

I'm surprised you went with A rod. Buffett has pal-ed around with Jay z and done interviews with him. Jay z spent his childhood selling drugs, smashed a girl's face, and stabbed someone in a nightclub. (on a sidenote, the last thing he said to the guy before he did it was, "you broke my heart." Gangsta)

 

Whatever. I can guarantee you that every single person here is friends casual acquaintences with one or two people who have done less than savory things in their past. It doesn't take away from Buffett's genious. Unless you want to marry Buffett (I will not judge you if that's the case) it's really irrelevant.

 

 

[stahleyp]

This is ludicrous.  Cheating on your wife = legal;

Cheating on your taxes = illegal;

 

I dont recall Buffett ever pontificating about how people live their personal lives.  He has advised people only to do things that make them happy and add to society.  He has advised his companies to stay above the line in terms of legality.

 

Lets ask Newt his opinion on what's moral, or amoral...... :o

 

Comparing morals to legality is crazy. Is it okay to jam someone into a high fee variable annuity within an IRA because it's legal?  ???

 

Hester, that is a good point with Jay Z. I don't know a ton about him though.

[Guest Hester]

This is ludicrous. 

 

Good point, but Luda has never been in trouble with the law  ;)

 

http://articles.businessinsider.com/2011-06-07/tech/30009132_1_picture-warren-buffett-photographs

[AZ_Value]

This is ludicrous. 

 

Good point, but Luda has never been in trouble with the law  ;)

 

http://articles.businessinsider.com/2011-06-07/tech/30009132_1_picture-warren-buffett-photographs

 

;D

 

Dude, you've just become the resident expert on all matters relating to Buffett's hip hop career. Congrats.

 

[Uccmal]

This is ludicrous.  Cheating on your wife = legal;

Cheating on your taxes = illegal;

 

Lets ask Newt his opinion on what's moral, or amoral...... :o

 

Comparing morals to legality is crazy. Is it okay to jam someone into a high fee variable annuity within an IRA because it's legal?  ???

 

 

OMG, how do I get into these discussions.  Your really serious about judging people's morals?  By the time you get to my age, you have seen nearly everything, I should hope.  People, simply put are not perfect, and never will be. 

[stahleyp]

This is ludicrous.  Cheating on your wife = legal;

Cheating on your taxes = illegal;

 

Lets ask Newt his opinion on what's moral, or amoral...... :o

 

Comparing morals to legality is crazy. Is it okay to jam someone into a high fee variable annuity within an IRA because it's legal?  ???

 

 

OMG, how do I get into these discussions.  Your really serious about judging people's morals?  By the time you get to my age, you have seen nearly everything, I should hope.  People, simply put are not perfect, and never will be.

 

I don't claim to be perfect and I know that people are not perfect. However, there are things that are more important than money. To me, integrity, honesty and loyalty to one's family are all above money. If business success is the most important factor...well, that's a shame.

[Guest Hester]

This is ludicrous.  Cheating on your wife = legal;

Cheating on your taxes = illegal;

 

Lets ask Newt his opinion on what's moral, or amoral...... :o

 

Comparing morals to legality is crazy. Is it okay to jam someone into a high fee variable annuity within an IRA because it's legal?  ???

 

 

OMG, how do I get into these discussions.  Your really serious about judging people's morals?  By the time you get to my age, you have seen nearly everything, I should hope.  People, simply put are not perfect, and never will be.

 

I don't claim to be perfect and I know that people are not perfect. However, there are things that are more important than money. To me, integrity, honesty and loyalty to one's family are all above money. If business success is the most important factor...well, that's a shame.

 

This may not sound great, but integrity, honesty, and loyalty to family don't contribute to society's advancement of knowledge. If we want to learn from the greats, we need to be agnostic to their personal lives.

 

I think that if you look at the greats of human history, many had odd personal lives. But it's ultimitely irrelevant to their wisdom in their field of study. Few remember Darwin's rascism, Einstein's adultery, or Jefferson's slave orgies. And few will remember Buffett's odd personal life or likely affair with Kay Graham. Their impact on society is no less great.

 

As long as they don't rail against something and do the opposite in their personal lives. For example, oppose gay marriage because of the "sanctity of marriage" and family values, whilst cheating on your cancer striken wife.

[ragnarisapirate]

This is ludicrous.  Cheating on your wife = legal;

Cheating on your taxes = illegal;

 

Lets ask Newt his opinion on what's moral, or amoral...... :o

 

Comparing morals to legality is crazy. Is it okay to jam someone into a high fee variable annuity within an IRA because it's legal?  ???

 

 

OMG, how do I get into these discussions.  Your really serious about judging people's morals?  By the time you get to my age, you have seen nearly everything, I should hope.  People, simply put are not perfect, and never will be.

 

I don't claim to be perfect and I know that people are not perfect. However, there are things that are more important than money. To me, integrity, honesty and loyalty to one's family are all above money. If business success is the most important factor...well, that's a shame.

 

This may not sound great, but integrity, honesty, and loyalty to family don't contribute to society's advancement of knowledge. If we want to learn from the greats, we need to be agnostic to their personal lives.

 

I think that if you look at the greats of human history, many had odd personal lives. But it's ultimitely irrelevant to their wisdom in their field of study. Few remember Darwin's rascism, Einstein's adultery, or Jefferson's slave orgies. And few will remember Buffett's odd personal life or likely affair with Kay Graham. Their impact on society is no less great.

 

As long as they don't rail against something and do the opposite in their personal lives. For example, oppose gay marriage because of the "sanctity of marriage" and family values, whilst cheating on your cancer striken wife.

 

You know, while I disagree with a lot of the situations that have been thrown out in this forum, I think that it is a mistake to judge people without knowing the situation they were in... I have not walked a mile in any of the examples' shoes. As a result, I think that what they did was wrong, but, that doesn't mean that any of us, put in the same situation may not have acted in a similar manner.

 

We are all humans, and will all screw up in ways that would appall other people, but, may have been something that we didn't/couldn't avoid. Everyone will do horrendous things when put in the right situation, especially when they think the rewards outweigh the consequences.

 

Just because people screw up, doesn't mean that their other accomplishments should be discredited or that their philosophy (such as value investing) is good or bad. As a correlation, I have noticed that a lot of people seem to not want to be religious, because they dislike the actions of people, who are "religious". That seems to me to be a big mistake, as it is obvious that humans screw up... there is nothing else to draw from that, other than people are fallible.

[Crip1]

This is ludicrous.  Cheating on your wife = legal;

Cheating on your taxes = illegal;

 

I dont recall Buffett ever pontificating about how people live their personal lives.  He has advised people only to do things that make them happy and add to society.  He has advised his companies to stay above the line in terms of legality.

 

Lets ask Newt his opinion on what's moral, or amoral...... :o

 

I refer to Buffett's famous quote "I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, be read by their spouses, children and friends. . . . If they follow this test, they will not fear my other message to them: Lose money for my firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless."

 

Buffett directs this to his employees which, presumably, would refer to actions taken in context of their professional lives, but those lives do cross for all of us. Given the choice to work with person A or person B, if they had comperable knowledge, experience, work ethic and talent but person A was reasonably clean where person B cheated on his wife, had a drinking problem and verbally abused his children, we would all opt to work with person A. Morality is important in the professional world, but it is not vital. Legalty is vital (Wouldn't you agree Messers Madoff and Blagojevich?)

 

I frankly think that such advice is relevant in one's personal life as well. If you're OK with having an article for all to see which shows that you had a dozen beers and 3 shots of tequila one evening, then have at it. Furthermore, if asked, I'd bet Buffett would concur that this is an admirable way to live one's personal life as well.

 

-Crip

[stahleyp]

I believe people make mistakes, but I also feel that people who live dishonest, unethical personal lives that those actions will show up in business, too.

 

Crip, very, very good point.