Graham And Doddsville

The Value Investing Capital of the World

Archive for the ‘Warren Buffett’

The Value Gene – Buffett, Klarman and Evolution

December 11, 2012 By: webmaster Category: Behavioral Finance, Benjamin Graham, Security Analysis, Seth Klarman, SuperInvestors, Understanding Value, Warren Buffett

On November 1, 2011, Charlie Rose interviewed Superinvestor Seth Klarman for the Facing History and Ourselves New York Benefit Dinner.  If you have not seen this interview, it is fantastic.

One of my favorite nuggets is the following (see 25:30):

Warren evolved through 3 stages:  He went from buying cigar butts and getting the last few puffs for free, to buying great businesses at really cheap prices, to buying and holding great businesses at so-so prices.  And maybe even this new area of buying weird securities from crappy businesses at better than market prices – like B of A preferred or whatever… I’m still in phase one.  We’re still buying cigar butts, there’s a good business there in buying them and it’s a lot of fun.
Another quote, which really struck a chord (see 22:20):
I think Warren captured the idea himself in his 1964 (sic) article The Superinvestors of Graham and Doddsville and in it he talks about – value investing is like an innoculation – you either get it right away, or you never get it.  And I think it’s just true.  I actually think there’s just a gene for this stuff.  Whether it’s a value investing gene or a contrarian gene.
It seems that researchers are beginning to confirm Klarman’s statement.  This morning, MarketWatch published an article titled The missing link of investing: Science may explain why we trade.

When asked why we trade, many of us would answer with traditional, rational responses. We see an undervalued company. We like a business, a brand or a strategy. Or, it’s the flip side: We’re selling because we may think the fundamentals point to trouble. We see an investment that looks overvalued.

As we know, most people follow the herd.  But what about contrarian investors – the ones featured on this blog – who consistently move against the herd?

It’s what the academics describe as a relatively new intersection of financial economics, psychology, and evolutionary biology including new interpretations of mutation. And the upshot, to me at least, is that we may not be as deliberative as we might think when it comes to trading decisions. In other words, we’re wired to trade a certain way.

According to Andrew Lo of MIT and Thomas J. Brennan of Northwestern claim that science evolution may explain both the herd mentality and also a contrarian one.

In other words, many of us are bound to the pack. A minority of us break away from it.

Both behaviors are necessary from an evolutionary standpoint because they’re necessary for the species to survive.  Every species needs its normal populations and its mutants.

I think I was just called a “mutant.”  I guess if that puts anywhere near the same group as Warren Buffett and Seth Klarman, then I am proud to be a mutant.

Click here to read the entire article The missing link of investing: Science may explain why we trade at

Click here to see An Interview with Seth Klarman and Charlie Rose.

Click here to learn more about Seth Klarman.

Warren Buffett & Carol Loomis

November 27, 2012 By: webmaster Category: Warren Buffett

I often refrain from posting about Warren Buffett, since there is no value investor on earth who is better covered by the media.  Every once in a while, I just can’t help myself.

Warren Buffett and Carol Loomis appeared on the Charlie Rose show last night, to discuss Loomis’ new book Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012.

Click here to watch Warren Buffett & Carol Loomis on Charlie Rose

For more on Warren Buffett click here.

Fall 2012 Issue of Graham and Doddsville

October 11, 2012 By: webmaster Category: CBS Faculty, Graham And Doddsville Newsletter, The Heilbrunn Center for Graham and Dodd Investing, Warren Buffett

The students of Columbia Business School have posted the Fall 2012 edition of Graham and Doddsville.   It is fantastic as usual!

The new issue features CBS Professor Joel Greenblatt of Gotham Capital, Jim Tisch and Joe Rosenberg of Loews Corporation and Chuck Royce, Whitney George, Buzz Zaino and Charlie Dreifus of Royce & Associates.

If you have already blown through this issue (like I have), then click here for past issues of the newsletter.

Blog Update:

When I started this blog, in 2006, I had just been accepted to business school.  The value blogosphere was already established, but not to the extent it is now.

Fast forward 1 MBA, 2 kids, and a dream job later.   This, combined with a large increase in the quantity of high quality value investing blogs, has practically brought this blog to a halt.  I was made even more aware of this when I saw listed as a top blog in Jae Jun’s recent newsletter on Old School Value.  Next to the name was (inactive).

Well, it is time for a compromise.  I am moving off of the inactive list.  While future posts will primarily consist of links, articles, resources, etc., I do plan to update the site more often.

In the meantime:

1.  Read Warren Buffett’s essay The Superinvestors of Graham-and-Doddsville.  I bet you are thinking that I went too far back to basics.  I know you have already read it, but trust me…  read it again.   I bet that some new thought will cross your mind about how Warren Buffett’s argument just makes sense.

2.  Enjoy the latest issue of Columbia Business School’s Graham and Doddsville.

2010 Berkshire Hathaway Annual Meeting Notes

May 04, 2010 By: webmaster Category: Warren Buffett

Every year value investors are inundated with notes from the annual “Woodstock for Capitalists.”  I have read many blog posts, notes, and accounts of the weekend.  My friend Ben at The Inoculated Investor has posted what I believe to be the best/most complete notes I have seen this year.

Click here to see Ben’s notes on the 2010 Berkshire Hathaway Annual Meeting.

Thanks, Ben!

Bloomberg TV Special on The Future of Value Investing

April 22, 2010 By: webmaster Category: Bruce Greenwald, CBS Faculty, Columbia Business School, Warren Buffett

Columbia Business School Professor Bruce Greenwald will be featured in a Bloomberg TV special “Buffett and Beyond: The Future of Value Investing” on Friday, April 23rd at 7 pm EST.


Link to Bloomberg TV

Lunch With Warren Buffett

February 24, 2010 By: webmaster Category: Guy Spier, Mohnish Pabrai, Warren Buffett

I am extraordinarily fortunate to be able to count Guy Spier of Aquamarine Fund as one of my personal mentors.  In 2006 Guy, along with Mohnish Pabrai of Pabrai Funds, won the annual charitable auction for lunch with Warren Buffett. This year’s lunch took place yesterday in Manhattan.

Obviously one can learn much by studying Guy as an investor.  One can learn even more by observing how Guy absorbs various mental models and incorporates them into not only his investment style, but also into every aspect of his being.  I believe that Guy exemplifies the term intellectual curiosity.  In a recent interview with Betty Liu of Bloomberg, Guy discusses some of the lessons he took away from his lunch with Warren Buffett.   Click here for the interview.

Warren Buffett also mentioned Guy and Mohnish in his interview with Betty Liu.  Click here for the interview.


Click here to read an article Guy penned for Time Magazine after his lunch with Mr. Buffett.