Blasphemy! says you; hear me out says I….
I’m sick of everyone praising the Buffettmaster with no one calling him out for what he really is. To be fair before I rant out my Buffettbashing, I will first give some tangential history and then pull back the curtain.
I started paying close attention to Buffett in 1994 when I was in finance, and I’ve religiously followed him ever since. I think it was 1999 when I noticed he was getting cozy to Bill Gates. I then watched as Gates dumped $40 billion MSFT into his Bill & Melinda Gates Foundation, at an all-time 52-week high ($82 if I recall)!
Obviously Warren was advising him. This slick move created a massive tax break for Billy & Mel, and allowed them to continue wielding their funds via the foundation, which for its titanic size has delivered exactly Dick for anything tangible in this world as far as I can tell. What could you do to make a better world with $40 Bil at your disposal? Can you name anything they’ve done? Go to their website and it’s all there. I don’t know about you but it bores me to tears and leaves me thoroughly underwhelmed and anything but inspired. Bill recently went to Norway and advised their $1 trillion sovereign wealth fund to invest in Africa, which is not altogether bad but hardly inspiring or my first choice of what to do with such a ginourmous sum of money. I digress, so I table this for another time.
Back to Buff. He looks to buy companies (often boring ones) with a history of solid growth in a predictably stable market with honest (for appearance sake) high-quality management. When he buys a company he often pays in Berkshire stock and encourages the owners to hold it forever. This act virtually eliminates downward selling pressure and discourages short selling. For the acquired company it’s great. They get access to the Berkshire ecosystem and an unlimited line of capital if they can make a solid case for growth. Add it all together, the collective of companies comprising the conglomerate, and we get a lot of employees and their families, which is why he owns Geico and General RE. We’re talking over a million people feeding the insurance machine with a solid base of policies: health, auto, home, life, etc. Of course he’s also after the float, meaning the cash flow difference between what insurance collects versus what it pays out; it’s big, and it comes in handy.
Without analyzing the whole portfolio I’ll single a few out. He has some great assets like insurance, Marmon Group, Apple, and Burlington Northern Santa Fe railroad and some shitheel companies with vile products like Walmart, Coke, Dairy Queen, See’s Candies, Kraft Heinz, and the lovely class-act Wells Fargo. I don’t shop at Walmart, not ever (it’s the smell), so I leave it to Amazon to bring them to heel. Well’s Fargo will meet its well-earned fate at the hands of distributed ledger technology, and good riddance, no one will shed a tear. But Coke, the DQ’s, See’s, and Kraft Heinz? What do they have in common? Well, they mass-produce the cheapest unhealthy crap possible or in other words, profit off poisoning their patrons. Us.
In 1989 I decided that I would do my part to put McDonalds, soda & candy companies, and all the other fast food franchises out of business. These industries feed off of “consumers”, their dehumanizing label for us, giving them money in exchange for their garbage products. So I made sure they will never get a single penny of mine, under any circumstance no matter how hungry or thirsty I am. Discipline! And when they acquire a product I once liked, Dagoba chocolate acquired by Hershey’s for example, I never buy it again (craft beer too!). It’s a small form of rebellion and I’m still eagerly waiting for the rest of humanity to wake up and catch on, so I remain patient. Even if Mickey-D’s goes free-range organic tomorrow, I’ll continue holding them accountable for preying on me as a kid with their demented marketing, and for poisoning all of us, so death to these criminal organizations says I; I’m happy to continue supporting the 1-off mom & pop shop even though Noble Sysco fuels many.
As an aside I was recently in Fiji and two taxi drivers pointed out the Burger King to me. On a beautiful island full of the best fruit, vegetables, and fish in the world, this is what people go for? Unforgiveable.
Now there’s a single incident around 2008 that tells me everything I need to know about Buffett’s holier-than-thou character: his treatment of his tender granddaughter Nicole Buffett, a resident artist in San Francisco. Nicole was featured in a documentary made by the heir to the Johnson & Johnson (another pillar of quality and virtue) fortune. Her appearance and mild comments were all Buffett needed to unleash the Kraken. He didn’t even have the decency to speak to her face to face and look her in the eye. Instead the coward wrote her a letter as he disinherited her and I quote, “I have not emotionally or legally adopted you as a grandchild, nor have the rest of my family adopted you as a niece or a cousin.” He signed it “Warren”, when a month earlier the nice card he wrote was signed, “grandpa”. Then his spokesperson delivered this coup de grace, “Nicole is not Mr. Buffett’s granddaughter. She is the daughter of a former daughter-in-law of his who was married to his son for only about 10-years.” There it is.
As the second richest man in the nation, he must have felt really big crushing someone so small. Someone who grew up viewing him with awe, looking up to him as larger than life the way only a grandchild can. Such behavior is typical of the super-rich, and it’s disgusting. So behind all the praise sung to Buffett in the media, this incident is more revealing than any. I suppose we can also draw attention to the fact that he has accumulated some $75 billion, or in other words, his value is equivalent to 75,000-millionaires. Wow! Holy Shit!! Any way you want to dissect it I think I’ll take 75,000 productive minds to one, even if it’s his.
Another interesting Buffett fact is he pays himself $100,000/year, presumably because he hates paying taxes. I’m not in total disagreement here, and it comes down to a perception of money. A friend with a successful construction company offers a good illustration of how people misperceive their money. One day I suggested he look at the 40% tax rate he pays as spending 40% of his time at work, or 100 out of 250 days/year, doing nothing but producing taxes. Instead I suggested he be more selective of the jobs he takes on, buys some empty lots, and use the extra time to build rental houses to generate a 10% yield (land + construction = X; X*10%/12 = monthly rental, add tax & upkeep). By doing this you leapfrog the taxable event and go straight to investment/retirement savings. Buffett is all about CAGR, compound annual growth rate, so he is loath to waste any money that detracts from this metric. He also believes money in his hands is more productive than anywhere else.
So that’s Buffett rendered naked. Now I’ll pick on Munger. He was asked his opinion about Bitcoin and he answered, “It’s rat poison”. LOL!!! How quaint Charlie. In his defense he’s been pretty smart over the long years, but this view says it all. Reliance on twentieth century thinking is going to prove painful in the next few years and while Duracell might cash flow, I’d rather own Tesla just as I’d rather invest in Elon Musks ideas over Africa.
(I actually have strong and unsolicited opinions I will absolutely share on Bitcoin soon and no, it will not be $500,000 in 2030 as a VC recently said because its more likely no one will care about it at all by then)
Parting thought: so what’s the “Brangelina” version of Buffett & Munger, “Muffett”? Bunger says I!
So I flip Buffett The Bird for painting himself as the epitome of noble virtue and irreproachable righteousness. In the future I threaten to share my disruptive views on strategies, deployments, and implications of decentralized systems and distributed ledgers; on monetary theory, occasionally government, historic anecdotal indulgences, release a Kraken or two, invoke offending pagan idolatry, call bullshit, reveal many wild dreams and fantasies of a better world for my daughter and humanity’s next 7-generations while raising a great horn of ale to the Innovators...may they live long and prosper…Sköll.
Dream Big, Make it Happen, and May the Decentralized Force Be with You!
I can also be found at https://medium.com/@akau.tau