Month: February 2020

Ideas, Events, and People

A quote that has always stuck out to me: “Great minds discuss ideas; average minds discuss events; small minds discuss people.” (Eleanor Roosevelt) Its unbelievably true how accurate this quote is, and how I have seen it reflected in my own conversations. It’s in the conversations/interactions that I discuss ideas where I feel the most alive, the most willing to take on the world and create change.

Yet this quote falls short in one area. Its not enough to just discuss these ideas, we need to execute. Ironically, it’s the events that take place and the people we meet that usually make that possible.

Buffett’s latest shareholder letter

In the finance world, today is like the NBA/NFL draft. Just like our eagerness to see who the Chicago Bulls are going to draft, learn about their plans for the future, and see their assessment of the previous year – thousands of people woke up today to read Warren Buffett’s annual letter to his shareholders.

Below are my quick notes/reflections on Buffett’s letter:

  • Extremely detailed – articulates all his thoughts in his writing style
  • Reference to Tom Murphy’s quote: “To achieve a reputation as a good manager, just be sure you buy good businesses.” (Brought me back to the time I was reading Outsiders for the first time – Murphy’s transformation of ABC/Capital Cities was remarkable and his advice should definitely be heeded)
  • Importance of using Insurance companies due to “float”
  • Heavily concentrated portfolio: Most assets are in his top 15 companies
  • Raises key issues that his investors may have and addresses all possible scenarios, gives a solid rationale and gives motive to prove he believes in what he says (He’s got all his skin in the game)
  • Addresses the fact that he nor Munger will live forever, and lays out a clear plan for why Berkshire/his team will be successful for years to come
    • Fascinating to see his plan for shares after his passing: Conversion from A to B class, then slowly dispense into various foundations/charities (process of 12-15 years)
  • Words of warning around the overall increase in complexity for incentive compensation plans and acquisition proposals
  • Skepticism around the value of Board Members and their motives, as well as the process for becoming a Board Member
  • Analogies
    • Acquisitions to marriage: Don’t be too quick to propose, things will not always be sunshine and rainbows. Some marriages can be idyllic and significantly better than you ever imagined
    • Acquisition Proposals are increasingly more complex, but cannot be fixed by the “expert” acquisition advisors: Don’t ask the barber whether you need a haircut
    • When seeking directors, CEOs don’t look for pit bulls, it’s the cocker spaniel that gets taken home
    • People can be good at one thing, but that doesn’t mean they should play in a lot of other areas. If you are Bobby Fischer, you must play only chess for money