How technical do you think Warren Buffett & some of the other Wall Street legends are?

Discussion in 'Wall St. News' started by pinetboltz, Mar 9, 2019.

  1. pinetboltz


    ok, so after watching a recent CNBC interview with Warren Buffett, it just occurred to me that his public speeches / media interviews tend to be fairly non-technical, in both senses of the word:

    1) easy for laymen to understand - not a lot of jargon or accounting specifics, etc
    2) fundamental analysis heavy - all about the 'story' etc, not so much on price action

    regarding point 1, the difference really stands out when you compare his interview answers with that of wall street analysts, who usually back up their stock pitches with excel spreadsheet earnings & cash flow projections stuffed with macros, bloomberg downloads, not to mention investment reports filled with jargon like "debottlenecking" / "retention of associate accounting treatment" / "selective rebuilding of verticals"

    given that he reportedly runs his headquarters with just a skeleton crew of a few PAs and a couple of bond traders, how detailed & in general - how - do you think he does his due diligence before committing capital? in another 'behind the scenes' documentary a few years ago, one of the owners who sold his company to Berkshire essentially said something along the lines of it being a handshake deal.

    it also kinda relates to the general observation that some of the Wall Street legends, particularly of the older generation, don't seem to be all that "technical", in the sense that if you analyze what they say, it comes across as very general/not that different from what your Uncle Fred might say after brunch on Sunday afternoons around the picnic table, as compared to say, answering with some fantastically sophisticated wizardry like you'd expect.

    & it's not just him either - if you listen to various interviews by other Wall Street legends, most talk at length on very straightforward concepts. i think in a biography of george soros, they mentioned that he tried taking a security analyst certification exam around the middle of his career before he launched quantum, but didn't exactly score very high. i mean, there must have been guys who scored close to 100%, but didn't return billions in profits.

    so my question is,
    - do you think they're actually a lot more sophisticated than the appearance they present? (got to be right, otherwise how would they reach the pinnacles of Wall St)

    - in what dimensions do you think they are more sophisticated than the rest of the street, such that they outperformed all their peers who are superficially more knowledgeable regarding accounting, macroeconomy, statistics, etc?
  2. clacy


    My guess is zero. Buffett is probably getting info straight from NSA guys that read all the emails of CEO’s.

    Same info that help Congressmen compound their wealth at 20%+
  3. pinetboltz


    lol, sounds a bit like zerohedge..i remember there was a news story that came out on some hackers who tried accessing M&A documents from law firms, and they helped disprove strong form efficient mkts hypothesis before being shut down
    athlonmank8 likes this.
  4. drm7


    Warren Buffett is effective because of two things a) accumulated experience and b) a superhuman memory and math ability. A person close to him (whose name I forget) says that "[Buffett] does discounted cash flow models in his head." He also has a near photographic memory, and can look at a company and compare how it is doing now versus what the margins were from 1991-1993 or something like that. Plus, he has accumulated so much knowledge, that it provides an incredible backstop. His semi-authorized biography is titled "The Snowball," for that reason. He said "knowledge accumulates and compounds over time, like a snowball rolling down a hill." (I paraphrased that.)

    If you are more interested in his life, I highly recommend reading The Snowball. It is NOT a "puff-piece," as the author Alice Schroeder presents his good and bad sides, and Warren supposedly cut off all contact with her after the book was published, despite previously having a very close relationship with her and giving her unlimited access when she researched the book.
    pinetboltz likes this.
  5. Seems Buffett has been more "legendary" than "legend" the past 10 years....

    apdxyk likes this.
  6. clacy


    The NSA has every email ever written. We would have to be crazy to think some of that info isn't going to politicians. Half of them go to DC with a couple of million and 10 years later are worth $100m+.
  7. newwurldmn


    Yes. Warren is insanely sophisticated. But the sign of a really intelligent person is that they can convey a complex nuanced idea in simple terms.

    Warren doesn’t use technical analysis. Value investors don’t because technicals look terrible when their valuation models look the most attractive.
    drm7, Visaria, apdxyk and 1 other person like this.
  8. Overnight


    There is no cabal.
    drm7 likes this.
  9. pinetboltz


    yeah, they're not "invincible" by any means - just wondering what kind of special expertise they got to rise head and shoulders above all the rest who are superficially more well-versed in traditional topics
  10. sle


    While I'd not rule it out, they don't need it really. They make lot's and lot's of money by exploiting political connections, access to policy information and lobbyist hookups.
    #10     Mar 9, 2019