ColbyCosh.com

I have no idea whether Warren Buffett is smart, lucky or some combination of the two, but it was a humbling realization (back in the day when I was studying Finance and Economics at University) that, through sheer luck, it was possible for an oracle of the market to start off as one in hundreds of thousands making pronouncements about the market's direction and, twenty, thirty or forty years later, be the last one standing to have made correct predictions throughout that entire time through sheer random chance.  Yet every one looking at him/her would say that the person's got an impeccable track record and is some kind of freakin' genius.

The markets will come back.  Will Berkshire Hathaway?  Probably, since it's very hard to kill something that big, but it will be somewhat humbled — which might be just what its worshippers need.

Garth

"Sheer luck" — "sheer random chance"

Sheesh.  Sorry for the duplication.  Proof-reading's a bear when I'm getting ready for bed.

(Too bad there isn't an edit function...)

Garth

Not true, sir! Or half-right at best.

Half of the questions will be filtered through the journos (ie shareholders (if there's any control on that) email the journos, the journos pick questions), and half will be from the shareholders at the meeting, but the shareholders who want to ask will be picked by random drawing.

The latter is explained by the fact that the meeting's door-opening has turned into a sprint for the mics.

I recall from previous letters that Buffett is usually pretty candid about his errors. The implicit message (reinforced by that chart showing B-H vs. S&P) is that his successes outnumber his errors, and he avoids errors with grave exposure.

He also explains, I thought with some clarity, the limits of the exposure from their derivative contracts.

But it's also not impossible to dismiss senility. I think in the '08 or '07 letter he explicitly addresses the issue of his own sound mind and succession.

One of the meta-problems B-H struggles with is finding investments large enough to absorb their huge piles of money. I don't recall how recent their regulated-utility biz is, but the play there is for these big businesses that are also big sponges for big infrastructure investments.

The hidden story: who was the bold photographer who told an old man who's worth more than the photographer's entire family who said "Mr. Buffett, can you please go sit on the floor in the corner?"

Silly question. It's not hard to take a good photo: the boldness is what we actually pay the professionals for.

> But it's also not impossible
> to dismiss senility

Jeebus, you guys are being hard on the big kids this week! Let's concede that Buffett's lost some edge by seniority... Do we have to call it "senility"? When tennis players lose a step on their 30th birthday, do you call them "crippled"?

Meee-yow!

Crid:when an athlete gets to that ugly point where suddenly, they're obviously no longer able to play the game, we call them all kinds of names, notably "old," "slow," or "old and slow." Or we say they've "lost a step."

The literal problem that would stop Buffett from doing his job would be senility. I'm not even trying to be mean ("useless codger past his sell-by date" would be mean).

Cosh: I am so smart! S-M-R-T!

If Buffet lives another five years, he will make a fool of all those who detracted from him today. He buys on bargain, and he is buying heavily right now. When the market comes back he will show us all once again who the man really is. Funny, this seems much the same as 1999, when Barron's ran on their cover "What's wrong Warren?". What was wrong is that the rest of us were screwing up and it was affecting him. When the chickens came home to roost he was eating KFC.

Yeah, that too, Ryan. Your point recalls arguments with people who won't wear seat belts because they believe stories about someone being killed by one... Never acknowledging that death occurred during an auto accident in any case. How well would Berk have had to do in this crisis before you'd have said merely that this perhaps wasn't Buffett's finest hour, rather than that he was "senile"? I coughed this morning; it wasn't tuberculosis.

I mean,

> The literal problem that would
> stop Buffett from doing his
> job would be senility.

Says who?

It's ridiculous for me to revisit this post 13 days after the last comment (sorry...) but just to clarify, I think Buffett lost money because sometimes he loses money.

The usual high literary quality of his annual letter argues against senility as a problem right now, but if Buffett suddenly seems to lose his judgment, it might be because he's unlucky, because he's regressing to the mean after a long lucky run, or because he has experienced a serious loss of his critical faculties.

And as for my "literal problem . . . senility" line, what I meant was that early-stage dementia of some sort is the only personal change that could prevent Buffett from doing his job competently, and yet not be completely obvious to outsiders (or insiders).

Examples of obvious things that could prevent him from doing his job: death, stroke...that's about it.