Fooled by Fanatics
Obsessively driven people who spend almost all waking hours perfecting their craft make difficult accomplishments look deceptively easy.
I have been thinking about a well-known apocryphal story about Wolfgang Amadeus Mozart’s interaction with a ten year old student. The aspiring young musician asked for advice about how to write a symphony. Mozart said that writing a symphony is complicated and suggested that the student start out by writing a few sonatas. The precocious student was obviously deflated by this suggestion and pointed out that Mozart himself wrote symphonies at an early age. Mozart replied that this was true but he wasn’t going around asking anyone else how to compose symphonies!
People who are highly skilled at their craft almost always make it look deceptively easy. When I lived in New Orleans, I often had the opportunity to see highly skilled musicians playing in all kinds of settings, from the street corner to small dive bars to large stages at festivals, as well as during the annual Mardi Gras parades. Even the street performers almost always played well and once you got into the smallest of clubs the music was top notch. The absence of mediocre or poor musicians created the deceptive impression that it must be easy to pick up an instrument and just play.1
Of course, in reality, most of the great musicians have been playing since childhood. They live and breathe their craft every single day and it almost seems as if the music plays through them automatically. We don’t see the much larger group of aspiring musicians who tried an instrument at some point and failed to distinguish themselves. In the highly competitive world of New Orleans music where even the most highly skilled artists have trouble eking out a modest living earning a share of bar revenue and tips, there is no room for any sort of mediocrity. The mediocre simply disappear.
What’s true in music is also true in sports. Early in one of the marathon courses I have run, there is an out-and-back segment that extends for a few miles. I am a decent runner, but not among the fastest, with a typical pace of eight minutes per mile. On that out-and-back segment, I was able to see the leaders running back toward me. As I labored along the course, runners on pace for a sub-three hour finish made it look effortless as they seemed to just sail along. Of course, they were actually putting in a huge amount of effort and perhaps some of them were also genetically gifted. Either way, they made what is impossible for 99% of runners look ridiculously easy.
Highly skilled investors often make their accomplishments look easy. There is no better example than listening to Warren Buffett talk about investing at Berkshire Hathaway annual meetings. His commonsense approach to investing makes so much intuitive sense. He came of age before the existence of computer systems to aid investors and he has never seen the need to use spreadsheets or fancier models when it comes to selecting businesses or securities to purchase.
He makes it sound like anyone can do this!
Mr. Buffett is not purposely trying to make his craft appear easier than it is and I do not think that he makes statements out of any kind of false modesty. What he does is indeed simple for him, but this is because he has had an intense interest in business for over eight decades in addition to an extreme level of intelligence. He has spent the vast majority of his waking hours for decades thinking about business and investing. Everything he says about investing must be taken with this background in mind.
The fact that Warren Buffett can make decisions without spreadsheets does not mean that I can do so. I need to organize data in a way that I can understand and I cannot conceive of doing so without using a computer. If I lost access to Microsoft Excel, I would have to use paper and pencil. I cannot rely exclusively on my mental storage and computation capabilities. I suspect that this is true for the majority of investors.
Warren Buffett actually does use a “spreadsheet” because his mind is capable of digesting large amounts of data and putting it into a usable form that he can rely on to make large and complicated decisions.
His mind IS the “spreadsheet”.
Warren Buffett can print out a 10-K on a Sunday, mark it up as he reads, and he simply retains the key figures. And then he can be ready to act on that information and on his insights on Monday morning. But that’s not the entire story. He has decades of background knowledge that the figures in the 10-K are layered upon and the combination of all of this knowledge is what makes it possible for him to act quickly.
When most of us wake up on a Sunday morning on a nice spring day, chances are that sitting quietly in a chair flipping through the latest Value Line page by page is not at the top of our wish list for how to spend the weekend. Nor would most people eagerly anticipate digging into some dense two hundred page 10-K written by lawyers.
Don’t get me wrong, I do enjoy thinking about investing and I read my fair share of financial reports. But it is not a passion in the same way that it is for Warren Buffett. I might want to have that same level of interest in investing but I simply do not.
My primary motivation when it comes to investing has always been to secure my financial independence. I have no desire to professionally manage money for others. It is not how I want to spend every waking moment, and I would not want to compete professionally with fanatics who are able to emulate Warren Buffett’s intensity.
I am convinced that the people who truly reach great heights in life are those who are fanatics when it comes to their chosen activity. Sure, these people might have genetic gifts that make their endeavors more fruitful but even the most gifted person will not succeed without both a driving passion for their activity and a great deal of hard work. Sometimes their success comes at the cost of many sacrifices elsewhere in their lives.
The runner born with perfect genetics to run a marathon in two-and-a-half hours will not achieve that objective sitting on the couch eating chips and drinking beer.
The most musically inclined artist will fail without daily practice for years. Sitting on the couch listening to John Coltrane will not make anyone a great saxophonist.
Even Warren Buffett would not have succeeded as an investor if he had not put in all the time and effort over eight decades, day after day after day, going through every page of the Moody’s manual and reading hundreds of annual reports every year.
With the cost of education reaching astronomical levels, some people roll their eyes when they hear advice urging young people to go into a line of work that they will enjoy and are passionate about regardless of remuneration. However, the core of that advice is good for anyone who really wants to reach the pinnacle of their profession or craft. You cannot reach the top if you do not have genuine interest in what you’re doing. Sure, it is possible to earn a living doing work that you find boring, just going through the motions, but I doubt that such people can ever rise to the very top.
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After listening to music on the streets and in bars for a couple of years, I bought a student alto saxophone and took lessons from a very skilled professional saxophonist for six months. This gave me an appreciation for the level of skill and dedication required to play anything at all, to say nothing of playing well. Although I never learned to play the instrument well, I did get a sense of how dedicated practice can get you to the point where you know the proper fingering for the saxophone almost automatically. The sound that came out of the horn wasn’t very good, but at least I got the hang of fingering the keys as I read sheet music. However, skills atrophy over time. I haven’t picked up my saxophone in two and half years and know I’ve lost whatever (extremely limited) abilities I had. The same thing would probably happen to my ability to analyze a 10-K if I go a few years without any practice. Fortunately, there is no risk of annoying the neighbors when I sit down to read a 10-K.
Another thoughtful article, Ravi. Three related anecdotes that might amuse readers:
John Train once asked Warren what questions he would put on a job interview. Oh, just one, Warren replied: Are you a fanatic?
At an annual meeting a shareholder asked, how do you value a company? I have heard this question asked three times. Each time Warren carefully explained that the value is determined by discounting all future earnings to a present value. The first two times Charlie added, “I have nothing to add.” Or, “nothing to add.” The third time, he replied, “In all of the years I’ve know Warren I’ve never seen him calculate a present value.” To which Warren shot back, “Ya, if I had to, it would be worth it.” Warren understands significance extremely well, and it must be obvious to be worthwhile.
Jeremy Grantham told me years ago that he would love to never have to read another 10K, to which I imagined Warren being told he could no longer read 10Ks.
I appreciated the comment’s made by my son’s coach after the soccer team won a big cup which hadn’t been won by the school in 42 years - “you boys should be proud, you had discipline (behaved and kept their decorum on and off the pitch), you used teamwork (worked together - no glory hogging), and you worked hard (showed up for practise and gave it 100%); if you apply these skills to everything you undertake as you go forward, you will find success.” I love this link between sport and life (or music, etc.) for young people.
Admittedly, the Mozart’s and Buffets of this world are exceptional - but the above I believe are good rules for a happy and balanced life.