But Where is Warren Buffett?

The spectrum of Buffett fans runs all the way from those folks who are intellectually rigorous and curious-minded to the extreme members of a cult. I will never forget the Japanese woman (name withheld to protect her from humiliation) who flew to Omaha and had a literal fit on the floor at the sight of Warren Buffett.

I encountered the cult in 1998. My favorite was the gentleman who wrote on a message board "I hope she dies of ovarian cancer." Good Lord. Check the stove. Is there a rabbit's head boiling in a pot? How insanely possessive can you get?

It's pretty clear why there's a certain amount of hostile noise about me now from a small group of people. I disconfirmed their beliefs by writing The Snowball and by being honest in its aftermath. This created cognitive dissonance, and the simplest way to resolve that is by blaming me. Because I understand and even empathize, it really doesn't bother me as much as you might think.

Psychologist Leon Festinger infiltrated the Marion Keech flying-saucer cult. From his study of cults he learned that “it is precisely when a belief is disconfirmed that religious groups begin to proselytize, a sort of desperate defense mechanism.” Lauren Slater, Opening Skinner’s Box.

Dear Alice,

If you go to http://dictionary.com and look up the definition of the word cult, you will find some eight (8) entries, all of which derive in some way from the Latin root “worship.” Definition #2, for example: "an instance of great veneration of a person, ideal, or thing, especially as manifested by a body of admirers." That is precisely what we have with Buffett/Berkshire, a secular cult following.

Belonging to a “cult” may be harmless, but it is more often than not dangerous. Cult leaders – and Warren Buffett is unquestionably the leader of a cult -- tend to exploit their members psychologically and use group-based persuasion techniques to get compliance from their body of adherents.

Charlie Munger some 25 years ago recommended reading a book entitled INFLUENCE: THE PSYCHOLOGY OF PERSUASION by Robet Cialdini, in order to help see through and avoid being manipulated by the use of compliance methods. Uniforms, for example, are one way of obtaining compliance from other people -- who can forget Leonardo de Caprio playing Frank Abagnale Jr. wearing the pilot’s uniform to get bank tellers to cash phony checks in the movie "Catch Me If You Can?" (Actually, who can forget Christopher Walken playing his father!!!).

We now have a full-blown, over-the-top, let-him-get-away-with-anything cult following of Warren Buffett. The problem with cults, even those as seemingly benign and “educational” as the Buffett cult, is that they discourage independence of thought and cede too much power to the cult leader, who then uses that power for selfish purposes.

That is why the word “cult” is frequently used in a pejorative sense and also why there is potential danger in being part of the Buffett/Berkshire “cult.” Because of his highly-evolved, folksy, non-threatening form of cult leadership, Buffett is coming closer than anyone in recent memory to refuting the last part of that age-old saying that ends with “…but you can’t fool all the people all the time.” He had me in the cult for a long, long time, and you somehow managed to get de-programmed out of the cult.

Buffett has admitted that he is motivated (“animated” was the word he used) by “controlled greed.” And he has essentially bribed his way to his current status – a status as close to untouchable and immune from criticism, and, yes, even above the law -- as anyone in modern business history. I say bribed because he has made so many people (including powerful legislators, CEOs of major businesses, and influential people in the media) so much money that criticizing him would be like “belching at a fancy dinner party,” to use his turn of phrase.

Initially, you joined the cult. Because of your mastery of insurance accounting, you then gained unprecedented access to the man. Somehow, unlike so many others, you escaped the groupthink of the Buffett cult. Now that you are free of the Berkshire cult hypnosis, you do the world, even the cultists who now attack you, a great service. You combine detailed knowledge with fearless criticism of certain of Berkshire’s practices and inconsistencies. And you have credibility in your criticisms because you keep them fact-based and do not engage in ad hominem attacks on the man or the cult he created. In consequence, you now are taking heat from the cultists, yet you handle that with poise.

I call on all Buffett cultists to follow your lead. Exit the cult! Challenge the growing lack of transparency of Berkshire's financials as vigorously as possible! Be vigilant as to motive! Above all, think for yourself! Don’t cede your own thinking about the investment process to Buffett!

Why? Why not just coattail? For several reasons. One, because it is more valuable to learn from your own mistakes than to think you can learn from his. Two, because, sadly, the evidence points to pathological greed, not generosity, as Buffett's true "animator," the thing that most motivates him. That is not good.

His eleemosynary “counter-revelation” -- in the form of the gifts to the Gates Foundation and to his kids’ foundations -- came very late in life and is more of a sophisticated variation of the John D. Rockefeller publicity stunt of handing out dimes to burnish the wealthy accumulator's image. It must have come very hard for Buffett to do that, but there was indeed a quid pro quo aspect to it. Could Gates actually be considered an independent director now? Hardly. Is there a single other member of the Berkshire board who is truly independent? No. Does it matter, even with the company is Berkshire and the CEO Buffett? Yes!

Generosity is a far more laudatory human trait than greed. Let's see.....what would Warren say to that? He would probably paraphrase the Gus Levy observation that he often quotes and say, "I'm long-term generous, not short-term generous." I fear that the reality is otherwise. Buffett has learned to hide the full extent of his pathological greed by letting lots of others in on it and by couching it in humorous remarks or by making pithy proclamations such as the one about being a good investor requiring that you be “animated by controlled greed.” Nowhere in the writings of Ben Graham do I remember seeing greed mentioned as an important pre-requisite for sound investing.

Someday the cult will disperse, and the cultists will be left exactly where you and others who got “out” are left: To think and act for yourself in accordance with your own set of human values and your own self-examination. Socrates's admonitions that "the unexamined life is not worth living" and to "know thyself" are far more important to a meaningful and fulfilling life than Buffett's admonition to be "animated by controlled greed" or his self-description that he was "born wired to allocate capital."

Sincerely,
ForMyOwnAccount