Word
Gems
What is a
man but the sum of his thoughts?
Wealth
& Economics:
- Robert
Hagstrom's
- The
Essential Buffett
Editor's note: I highly recommend this book. Hagstrom offers a
wonderful synopsis of the work of Warren Buffett, the greatest investor-businessman of our
time -- and, maybe, any other time.
Hagstrom quotes Thomas Kuhn, physicist turned philosopher, author
of The Structure of Scientific Revolutions (1962), who coined the term
"paradigm shift": "... before there was a paradigm shift ... there was
a crisis period ... you might think that ... scientists would readily accept new and even
contradictory information and then work collegially to construct a new paradigm. Nothing
could be further from the truth. Though they may begin to lose faith and then
consider alternatives, they don't renounce the paradigm that has led them into crisis.
They tenaciously hold on to the old paradigm because they have invested so much personal
intellectual capital in it. Accepting the new would be ... admitting failure, and that is
a risk not worth taking."
Hagstrom explains how Buffett's views of Graham's work were
eventually tempered by that of Fisher, via Buffett's friend, Charlie Munger:
"[Buffett once commented:] I evolved, but I didn't go from ape to human ... in a
nice even manner. Buffett's evolution was delayed, he admitted, because what Graham
taught him was so valuable... [Graham looked at a business' "numbers" but did
not emphasize the nature of the business or the capabilities of management.]
Graham counseled Buffett: "You are neither right nor wrong
because the crowd disagrees with you. You are right because your data and reasoning are
right."
Hagstrom wrote another book on the investing-wisdom of Charlie
Munger, Latticework: The New Investing -- recommended. More than a book about
money, this work also explores the nature of wisdom.
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