Wednesday, October 26, 2005
some rambling on Oct 26
Warren Buffett recently mentioned that he personally went through thousands of pages of stocks in 1951.
Back in 1951 Moody's published thick handbooks by industry of every stock in circulation. I went through all of them, thousands of pages, motivated by the hope that a great idea was just on the next page. I found companies like National American Insurance and Western Insurance Securities Company that nobody was paying attention to that were trading for far less than their intrinsic values. Last year we found a steel company on the Korean Stock Exchange that had no analyst coverage, no research, but was the most profitable steel company in the world.I'm trying to do the same thing with the Pink Sheets and OTC BB. No matter how much experience I have with large amounts of information, it's still fairly overwhelming. But focus and determination are very effective.
As I've mentioned before, I find it ironic that Buffett has laid it all out for people as to how he was successful when he ran relatively small amounts of money. The method is described, and it is no more complicated than "keep turning over these rocks in the wasteland of unknown micro cap and unnoticed small cap companies, and search methodically and throughly for unrecognized value. That's it."
Yet the BRK board still wants to debate WMT v. BUD.
Keep it up, you're an inspiration.
Turning over rocks is not glamorous, it's not very fulfilling in terms of learning Great Things, it can be very demotivating when you go for long stretches without finding anything good, and it's hard work. But I find that I learn a lot by looking at vast numbers of businesses, and it's a very different kind of knowledge than what they like to discuss on the BRK board. The book Blink by Gladwell is an outstanding look at the kind of knowledge you get from large amounts of experience.
Sometimes I'm afraid that all those investors will suddenly start turning over rocks and people like us will be in trouble. But I don't think that's going to happen.