Last year, I put up the first in what I thought would be a semi-annual series I titled “trite Buffett quotes that hit me.” As mentioned in that post, the background for the series was: One of the things I absolutely hate about Warren Buffett is that he has a ton of quotes that I’ll hear and think “o that’s obvious; how trite”…. and then a few years later I’ll stumble on something and Buffett’s quote will click for me and I’ll think “Gosh darn it; there was so much wisdom in that one damn quote. How does he keep doing this?”
Thanks for the article. Thought provoking. This Buffett quote also reminds me of his admonition to "delight the customer." In businesses where the customer experience matters -- retail, cable, restaurant, consumer -- I won't touch any company that my wife thinks poorly of. Why? She's a decent barometer of the average customer. And no matter how good the spreadsheet math is, if the customer isn't happy then the business won't last. Buffett seems to do well with stocks/businesses where he likes the product (Coke, Sees Candy, or in the case of Apple, where he saw how much his grandkids loved the product) and then he applies back-of-the-envelope math to be directionally correct if not precise about the company's earning power. I also think wealthy investors -- who are likely out of touch with what poor people really think about the retail/product experience (e.g., Eddie Lampert and Sears, or anybody pitching DG) -- ought to be extremely reticent to trust spreadsheets if they don't shop at that store or use the actual product. All of this reminds me of the popular meme with the bell curve: the idiot investor buys a stock just because he likes the product, the average investor buys the stock because of the spreadsheet math, and the genius buys the stock because he likes the product (and the rough math works).
I really enjoyed this article Andrew, thank you for writing it.
thanks for the article... I find my best investments are the ones where I got them wrong the first time and now understand them much better... so... with that in mind, what are your updated thoughts on CHTR and ATUS ? would be a good article to do a revisit
Great reading! Thanks.
Good stuff, thanks!
Ha! I can give you an example to prove your point. I know of a successful CA chain that has failed at least twice to expand nationally. It’s not In-N-Out or Trader Joe’s. If you haven’t lived there, you wouldn’t know it.
Reminds me of "the medium is the message". The tools and models we deploy have an unintended effect on the nature of inputs and outputs.
Really liked this post. I like Excel models, but I'm definitely working hard to become more and more focused on the underlying business in almost any long-term long pitch.
I also think it's good to confront some of the "I model 2% growth..." forecasts with a simple "why?" Good investors have thought-thru answers.
There's no sense in being precise when you don't even know what you're talking about.
- John von Neumann
As the 2022 (and soon to be 2023) Financial Modeling World Cup champion, I fully endorse this post.
Midwit meme applies to a large number of people in that community. "Judge a business by modeling DCFs and KPIs in Excel. That's all you need, right? RIGHT?!" Ridiculous
“...inferior investors always buy the cheaper second fiddle instead of the market leader.” This is how I feel being in Tegna..
"once the multiple gets low enough an investment becomes much more binary around those numbers or a cycle". That's me! I accept the unknown.
So much money is lost trying to find the next top quality company that will be the best of the best at high valuations. I believe that it makes investing much more difficult because you need to be very right about the business.
BTW loved the videos about IWG PLC.. Entering it..