The hypocrisy of Warren Buffett?
moneyrelations :: Dec.04.2007
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I write a lot about Warren Buffett. In fact, my featured posts are mostly about him. Some might wonder why, but the truth of the matter is, for a newbie, why not learn from the best? And quite frankly, others are looking for the same information.
The Oracle of Omaha is optimized for organic hits.
However, this post is a long time in coming to offer some balance to fanboy/fangirl enthusiasm.
I’d like to share an article I found on the Internet called, “The dark side of Warren Buffett“.
The blogger, Eric Schleien, points out how carefully crafted Warren Buffett’s reputation is. However, Buffett himself did not always practice what he preached.
- Buffett started out as a corporate raider which is quite different from his buy and hold strategy.
- Buffett preached the the importance of family, but had strained relationship with his kids. He disowned a relative (adopted granddaughter), and had a mistress while still married to his wife.
- Buffett used his influence to convince Berkshire shareholders to vote for staying invested in PetroChina despite the company’s questionable involvement in Sudan where genocide is being committed.
- Buffett has a cult-like following which flip-flop on his whim. He won’t give to charity while he’s alive / he will give to charity while he’s alive. In either case, he’s praised.
Eric brings up these provocative points and I will also add my own views.
I agree with the first point and that’s why I question the buy and hold strategy. In principle, it is good to develop a portfolio of companies in which you will hold forever - but I want to be financially free in the near future. Therefore, other strategies need to be employed. And obviously for Buffett to satisfy his clients, he has to produce results.
To review the second point, I have read a few Buffett biographies and the living arrangement with his wife and mistress was agreed upon by all three. As for the rest with regards to family, it doesn’t have to do with investing. So what if Buffett preached the importance of family but might not be the best family man? I might not like spinach either but I can still say that it is good for you.
With regards to the third point on PetroChina, I agree that Buffett holds tremendous influence and his arguments have a lot of old school charm. And who is going to argue with him? The bottom line is that Buffett makes his shareholders money.
From Reuters quoting Buffett on PetroChina:
“It was a very easy decision to buy PetroChina. It was one-third of what it was worth, maybe a quarter. I doubt in the present market I would find something like that. The market has been too hot. I will keep looking,” he said.
When he finally got out of PetroChina, (I guess it wasn’t a buy and hold) he could have admitted it was due to the pressures of human rights activists but he actually wrote a letter to PetroChina CEO to thank him for the wonderful job he was doing for shareholders.
Finally, to address the fourth point, people need to make up their own minds. Absorb what Buffett has to say and see if it is the best strategy for them.
For me, I choose to listen to what he preaches knowing full well that he is human and makes mistakes as well. What can I say? I’m drinking the Coke he’s selling.
As the Warren Buffett imitation study shows, he’s still one heck of an investor to follow.
Warren Buffett ::
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Hey Great Post! Thanks.
Eric
I never viewed Warren Buffet that way. Thanks for the info in this well-researched post.
Admirable! Cheers!
@ Eric
Hey, the author dropped by himself. Thanks for taking a brave position!
@ Ronnie
Eric inspired the post and I thought I’d highlight it to offer the other side of the story.
Thanks for checking me out guys!
Yeeks! You’ve really shown me Warren Buffet’s dirty linen. But then again, you’re right. Who are we to judge when the rightful people whom he’s accountable for (i.e. stockholders) doesn’t complain?
Great article, Mariam…
Cheers,
Ellesse
Buffet is a public figure so we end up learning these kinds of details after a while. How many other great investors are also poor family men etc? Probably a few at least but since they aren’t household names we never hear about them.
Mike
@ GSC
Hi, thanks for commenting!
Really? Was it that much dirty linen? I thought I was being pro Buffett
I think what I took most out of Eric’s original article is the fact that Buffett is not a pure buy and holder. He can’t be. His portfolio will change depending on company circumstances.
@ Mike
Hey, Mike.
From my point of view, the discussion about his family is subjective. Is he really a poor father/husband? Who knows as that’s open to interpretation and we are each biased to our own experiences.
But I do believe that the media was respectful of Buffett’s situation with Astrid.
I can’t really name a well known investor who had a mistress out in the open…
Does Donald Trump and the circus with Marla Maples count?
[...] from Money Relations presents The hypocrisy of Warren Buffett?, and says, “Is Warren Buffett a hypocrite for not practicing what he [...]
Imho, knowing that Buffet is not following his preaching (including family relations) is very important because it shows if he doesn’t have integrity, i.e. don’t always follow the same principles (honesty, trustworthiness, etc.)
And I would question correctness of this statement: “The bottom line is that Buffet makes his shareholders money.” Because the means are as important as the ends:
“If you reach an admirable end through the wrong means, the ends ultimately turn to dust in your hands.” (S. Covey, “The 8th habit”)
And here is what Gandhi named “The Seven Things that will destroy us”:
- wealth without work
- pleasure without conscience
- knowledge without character
- commerce without morality ******
- science without humanity
- worship without sacrifice
- politics without principle
I thank you so much for such wonderful comments and quotes, Sam.
Commerce without morality - This is so intriguing because this trickles down to the consumer level or in Buffett’s case, shareholder level.
Bottom line, it’s the consumers who vote with their wallets if they want “morality” and the producers will supply accordingly.
I agree that shareholders might not want “morality” in business. Then it is up to Buffet to make a choice: “to be or not to be” a real leader and to do or not to do “commerce without morality” (i.e. don’t participate in bad things and do what his conscience says.)
Hey Sam,
Thanks for bringing in a different point of view.
I understand what you’re saying about “real leadership”. However, that’s a big weight on the fallibility of mankind. It’s a slippery slope when you base one person’s judgment on what is moral.