Warren Buffett the Legend
The legend of Warren Buffett is more than genius investor. It is a legend which encompasses the qualities of sagacity, wisdom, and commonsense. Instead of 300 foot yachts and hundred million dollar homes Mr. Buffett lives a comfortable upper middle class lifestyle which shames the average Russian oligarch. Where others focus on themselves, Mr. Buffett gives away the bulk of his life earnings to charity. And Mr. Buffett is always ready to be there for the common man and nation, from fighting for higher tax rates on the wealthy on equity grounds to writing encouraging letters to General Motors in its dark days.
The characteristics which make Mr. Buffett a great person create synergies with his investment acumen. As I wrote this week in the N.Y. Times, Mr. Buffett’s aura enables him to be a dealmaker without parallel. Boards and investors appear to give Mr. Buffett better deals simply because he is Warren Buffett, and these parties want to be associated with Mr. Buffett’s magic. In other words, merely being Warren Buffett creates value for Berkshire Hathaway on a scale Donald Trump can only dream of.
Maintaining this well-deserved reputation is paramount for Mr. Buffett, which is why he took the alleged insider trading controversy with Lubrizol and David Sokol so hard. To have worked so many years and see it possibly risk taint is not an option.
It is here that we come to The Essays of Warren Buffett. Simply put, the legend of Mr. Buffett is enhanced and promulgated through his letters. They not only provide sage financial advice — talking about derivatives as “weapons of mass destruction” well before the financial crisis – but they promote the legend of Mr. Buffett. He dispenses economic advice, financial advice and talks about the fate of not just of Berkshire Hathaway but America. These are letters for the entire population, not just lessons for corporate America. Professor Cunningham has done quite a service by curating these letters and updating this volume.
As letters to the common man, Mr. Buffett’s writings are well worth reading just like similar writings from Benjamin Franklin centuries ago in Poor Richard’s Almanack. And the Franklin comparison is not unintentional. Read Mr. Franklin’s autobiography and note that while travelling to Philadelphia he gives away what money he has saying “[a] man being sometimes more generous when he has but a little money than when he has plenty, perhaps thro’ fear of being thought to have but little.”
Mr. Buffett, though wealthy adopts the same approach – money is to be made but for the giving and more money will come. In short, Mr. Buffett’s self-professed and actualized virtues mirror this revolutionary war figure. And like Franklin Mr. Buffett professes these virtues in a very public manner.
In comparing Mr. Franklin and Mr. Buffett for their writings, I do note that both also exhibit an ironic self-awareness. After-all remember that when Mr. Franklin compiles his virtues for leading a perfect moral life, the last and thirteenth he adds is humility stating “I cannot boast of much success in acquiring the reality of this virtue, but I had a good deal with regard to the appearance of it.” Franklin is poking fun at himself. And it is not hard to see Warren Buffett also doing the same, laughing at himself and with us as he continues building his legend and writing his common sense letters.
Steven M. Davidoff is a Professor of Law and Finance The Ohio State University, where his research focus includes financial regulation and mergers and acquisitions. He is a columnist at The New York Times, where he writes the Deal Professor column, and author of the book, Gods at War: Shotgun Takeovers, Government by Deal and the Private Equity Implosion. He is a former corporate attorney at Shearman & Sterling; his research is available via SSRN, here.