Simplicity
“Simplicity” is often confused for “ease.” In common language and conversation, we hear these two words used interchangeably. What we forget is that what’s often “simple” is rarely easy. However, things that are “easy” can be “simple.”
I said this on Twitter yesterday after finishing up Buffett: The Making of an American Capitalist by Roger Lowenstein, which inspired the thought. Warren Buffett’s complete lifestyle and investing philosophy was plain and simple. But, it was anything but easy.
As a family man, Buffett was described as the “boy” of his household. He was completely dependent on his wife for anything outside of business. He had a love for Cherry Coke, McDonald’s for lunch, and once ordered an ice cream sundae for breakfast while on travel.
But, unlike most fund managers, he slaved hours upon hours over quarterly and annual reports of companies, never relying on external research. Buffett was his own computer, performing all valuation calculations in his head.
Buffett sought value in everything he did. His incredible, long-term performance has remained simple, as he hasn’t relied on tools of financial innovation, including derivatives or leverage. His investment advice was often playful and humorous. He once gave an example of a man with a “lifetime punch card.”
Every time he bought a stock he punched a hole. When the card had twenty holes he was done—no more investing for life. Obviously, the investor would filter out every idea but the best.
Warren had the reputation, and still does, of being somewhat of an oracle. He doesn’t trade on inside tips, but people just sensed that he “knew.” Always logical, he was never moved by faith–only by facts. His confidence is so sturdy he’s rarely doubted.
Even at a net worth of $37 billion, he still lives off a mere $100,000 salary. He once ran from 61st Street to 79th Street in Manhattan in his business clothes, simply because he “wanted his freedom.” And when asked about his fortune, Buffett said:
I can have anything I want that money will buy. But I always could.
Lowenstein wrapped up the book well, relating Buffett’s way of managing any relationship the same way he treated an investment relationship:
Though fearful of hostility, he knew what many are slow to learn–that a sustained demonstration of good faith is apt to be returned in kind, if it is not undermined by any conflicting behavior.
