"It's (Value investing) like an inoculation. If it doesn't grab a person right away, I find that you can talk to him for years and show him records, and it doesn't make any difference. They just don't seem able to grasp the concept, simple as it is." - Seth Klarman
Thursday, October 05, 2006
My personal tribute and gratitude to Mr. Warren E. Buffett
The following letter is something I wrote in July this year and sent to Mr. Buffett. I would like to share the experience that I went thru with all the people whom I hope will be able to gain some positive effect out of this to inspire their dreams and life for the better. Part of what I am doing is to document down my entire journey from the day of how I got started in doing what I like to do, and hopefully to the day when I am immobolize or have lost my ability to do this correctly and logically. And also hopefully, I will be able to document the things that I have both done correctly and incorrectly for others to either replicate the correct things or to learn and not to repeat past mistakes done by fools.
Dear Mr. Warren Edward Buffett,
I am writing to express my gratitude and honor for you. Though I have not met you or know you personally, I would still like to show my gratefulness to you for your remarkable intelligence, knowledge and thoughts which you so readily share with the public all the time. I have always been interested in the field of investing since a long time back but it was only during last October that I managed to stumble upon a sensible and logical philosophy towards investing. Prior to last October, I do not have even a tiny bit of an inkling on it, it was all pure speculation on what you may label as "wanting a last dance at the ball with Cinderalla." A large part of it can be attributed to your influence that totally shaped my outlook towards life in general for the better.
What had got me started seriously can also be attributed to a dear friend of mine, CH (who is also a huge ardent follower of yours and owns Berkshire B share). As a respect, I have copied him in this email and I would appreciate that you will copy him if you reply. He handed me a book - The Making of an American Capitalist - which totally blew me away after reading it. During which, I discovered the grandfather of Investing, Mr. Benjamin Graham who is both your personal friend as well as teacher. I bought his books - "The Intelligent Investor" and "The Interpretation of the Financial Statements" - for which any to-be investor should read before embarking on the path of investing. In terms of value, these books are totally invaluable and I bought it at what intelligent investors will regard it as "rock-bottom value". What could take me a lifetime to learn (if it even may happens), it took me a few months to grasp the idea of rock-solid investing fundamentals which involves a mix of having the right mentality, psychology, discipline, patience, reasonable level of IQ, logic and a fairly decent mathematical skills. It works like how a duck takes to water. It's like "BAM, everything falls right into place, makes sense and wired up in one fell swoop!" To borrow a line from you "No, I hadn't changed my diet or anything. The only new ingredient was Ben's ideas. Quite simply, a few hours spent at the feet of the master proved far more valuable to me than had ten years of supposedly original thinking. My debt to him is incalculatable." My debt is incalculatable towards you as well as to Ben, and your long-time partner and alter-ego Charles Thomas Munger for having the best minds and thoughts towards defining a proper way to the field of investment and often, such principles are also practical for other aspects outside of investing.
To quote a few lessons I learnt from you, I think the most important concept is the principle of defining one "Circle of Competency" whereby its size is not very important, knowing its boundaries is however vital. I agree that it is always more important to define things which one do not know rather than things one already know. And this is, in my view, not an easy principle to embrace immediately for most individuals due to the human nature of modesty. It is never easy for one to acknowledge one's shortcoming. By recognizing this, it actually makes one realize it is easier to improve. More often than not, by nature, trumpeting routs modesty because it simply boosts one's ego. The easiest person to fool is most often oneself. Another thing I learnt is the "perverse nature of human to like to make easy things difficult." I have taken 28 years to recognize the notion of such simple but yet much neglected principles. I'm glad by the stroke of luck that these simple principles are pointed out by you, Ben and Charlie. Also, I was reading Berkshire's year 2000 annual report, in it, I discovered the Aesop's investment axiom if "a bird in hand is worth two birds in the bush." And "BAM", there it goes, it totally makes sense on the principle of valuation.
The world, now and the future, is so fortunate to have an opportunity to learn from the best minds and people in investing which give a hope to shaping the world in a better way. What you, Ben and Charlie have achieved will definitely benefit the future generation with the legacy (which is the knowledge) that will be left behind.
What further impresses me is the rareness of a mega-rich person who will donate a major part of his fortune for the good and future of the society. I too agree with Andrew Carnegie that "Huge fortune which flows in large part from society should in large part be returned to society" and your thoughts of not creating a "dynastic fortune" to be passed down generation after generation which will tilt the already imbalance society even more. Children born in mega-rich family in effect have an advantage over an average kid with all the opportunities laid out on the table by their parents. Many a times, having a "too good and comfortable" life will often lead to complacency and instead of helping the children, it ruins the children's future. Usually, when the fat gets fatter, they get lazier and slower to a point they become inert. However, having said that, I too agree with you that "a very rich person should leave his children enough to do anything but not enough to do nothing."
It is rare to have a very successful person to be the second-richest man in the world. It is even rarer to have the second richest person to share his knowledge so candidly. And it is practically impossible to have a person with the preceding two factors to be remarkably generous for the good of the society. Therefore, I hail you for having the grace to share your astute knowledge and wealth with the general society at large, and also for having the enlightenment to see beyond the love for money and many other material things that many average human beings cannot see and feel.
Lastly, I realized how much you enjoy working with wonderful people who relish doing what they like. This is all-important because only by doing what we enjoy, we enhance our odds to excel in it and live a more fulfulling life. I discovered people like Katharine Graham, Philip Fisher, Tony Nicely, Tom Murphy, Ajit Jain and so on. If there is a chance, I would like to get an insight into the thoughts of these wonderful individuals. So far, I have read "Personal History" by Kay, "Common stocks, uncommon profits" by Philip and "Damn right" a book on Charlie Munger. All the others, I'm unsure if they have any writings, but if they do, I will definitely read up more on them. I believe these remarkable individuals can rub positive effects on others.
I am still learning day after day, stocking up on my knowledge. I find it satisfying to look at a painting where I can add on slight adjustments to it daily. Personally, it is the journey of learning and improving that is more satisfying and enjoyable than the end result itself. I hope to go for Berkshire Hathaway annual meeting one day, hopefully, to pay my utmost regards to you in person. By the way, I do not hold any Berkshire shares at this moment, but I hope to own some at the price that I view to be fair, hopefully in the near future.
If it was not because of the sensible principles and ideas which you, Ben and Charlie have provided, I would not have been wired up to allocate my funds in more effective and better way. You taught me to be humble, candid, acknowledge my shortcomings and define where my strengths and weaknesses lay and far more a lot. Therefore, once again, I thank you for all the knowledge you have provided through your past writings, speeches, interviews given, articles and yearly annual reports. This is the least I can do to pay my tribute to one of the most remarkable, wonderful and beautiful person in the world.
Yours Sincerely, BC Singapore
PS: I took a hell lot of time to write this and effort. I do not hold much hope that you will reply me but I hope you will at least read this. Actually, I applied what I learnt to this, by putting more effort, I am trying to improve my odds, hoping this will be something interesting for you to read and perhaps reply.