Comments on: Venture Cap Reading

By: Lex

Lex — Sat, 01 Oct 2005 18:10:31 +0000

Yeah, Buffett has cultivated his whole “aw, shucks” avuncular curmudgeon shtick as a way to gain popularity as a folksy wise man, instead of a rapacious capitalist. Very clever. He saw all along that the PR and political dimension of what he does needs to be carefully cultivated, too, not just the pure business side. I think that if Michael Millken had been so clever he never would have gone to jail.

By: Jonathan

Jonathan — Sat, 01 Oct 2005 16:17:32 +0000

The joke is that almost nobody remarks on the exploitative qualities of Buffett’s investment style, whereas George Soros, who made his money fair and square by honest speculation, frequently is accused of being economically destructive.

By: Lex

Lex — Sat, 01 Oct 2005 15:36:52 +0000

George Stigler (who is on our masthead) once said, “If I knew why the stock market does what it does, I’d be talking to you from across my solid gold desk.” I have great admiration for the guys who can get more hits than misses at that game. Buffett and Bessemer have both managed to do that. They have a model, and it works for them, and they stick to it. No doubt every successful trader has lots of “big fish that got away.” It would be interesting to hear from these guys what their most disastrous investments were, and why they thought, up front, that they would be winners.

Jonathan, that book came out many years ago. No doubt Buffett has changed his approach over the years. Also, I agree, a certain amount of strategic disinformation may well be part of his public message and public persona.

By: David Foster

David Foster — Sat, 01 Oct 2005 15:09:41 +0000

Lex..Bessemer is a very successful VC firm, and has had many successes in the so-called “high tech” field (like Skype)…and some of their misses were in non-tech areas (FedEx). I don’t think they are missing what makes the tech businesses valuable; it’s just that when you bet on the future, you’re sure to have a fairly high % of misses..which hopefully will be more than balanced out by the runaway hits.

By: mariana

mariana — Sat, 01 Oct 2005 06:46:47 +0000

“Of course, if you had stayed out of the last wave of tech stocks entirely, you’d have been better off, in most cases … .”

Not necessarily. I think the trick would have been getting out just before the market tanked. Anyone who pulled that one off would have made off like a bandit.

By: Jonathan

Jonathan — Sat, 01 Oct 2005 05:00:02 +0000

I think there are significant discrepancies between what Buffett does and what he says he does. Else all the accolytes would be getting rich on their own, and I don’t think many of them do. But perhaps I am wrong, and the economy is really driven by tightwads buying distressed properties cheap rather than by risky investments in productivity-enhancing technologies. I think it was Don Luskin who pointed out that Buffett benefits heavily from our confiscatory death tax, which he conspicuously supports, because it forces many business onto the block after the deaths of their founders.

I admire Buffett for his success but not much else.

By: Lex

Lex — Sat, 01 Oct 2005 03:33:28 +0000

Warren Buffet, in the Money Masters, said he never invests in what was then called “high tech”. If he didn’t understand how it worked, he left it. Also, he was of the view that all high tech firms have to bet the company every few years on new products, and that even the best of them would blow it eventually, so it was better to look for other sources of value. I don’t know if these guys had a similar philosophy, or were just not attuned to what would make these businesses valuable. Of course, if you had stayed out of the last wave of tech stocks entirely, you’d have been better off, in most cases … .