WARREN BUFFETT: The enduring legacy of a financial genius at work

On money matters it is safe to say that most people don’t know what they are talking about, especially in the investment markets. Most brokers would rather fake knowledge of finance, look stupid in the investment world.

Money Advice – BOSASA blogsCorporate-speak terminologies such as “investment genius” don’t mean much once you start to dig deeper. According to investment folklore, people who love money become speculators, not investors. The fuzzy logic of the investment world makes both experts and amateurs invest based on psychological emotions and ignorance, rather than on commons sense. The fundamental question is what does it mean to be a genius when it comes to money? Is Bill Gates an investment genius because he is worth over $68 billion and one of the richest persons on planet earth? The financial jury is still out.

In no other financial market is the term ‘genius’ misused with less justification than on Wall Street, where lucky speculators would like to pass for financial geniuses. Any money manager on a sustained hot streak is likely to be called an investment genius. But however long an investor outperforms the market, there will almost always be a subsequent reversion to the ‘mean’ – a falling back to the less successful crowd which suggests that randomness plays a disproportionate part in the hard-to-measure financial performance in the market place. It is nearly impossible to pinpoint an investment genius with sustainable success over a long period. Furthermore it is still hard to differentiate the ‘skilful’ investor from the ‘lucky’ one. This assessment has been confirmed by many academic studies showing that an above-average investment performance is both unpredictable and unsustainable.

Who is a genuine genius?

In 1790 the German philosopher, Immanuel Kant, described genius as: ‘the talent for producing that for which no definite rule can be formulated’, adding that for any thought or act to even be considered genius, it has to be both original and exemplary. By original, he meant that nobody else in the same field come up with the same idea or design. Exemplary meant it was not just useful but worthy of imitation and admiration: it had artistic value. It is nearly impossible finding the level of brilliance which can be appropriately called ‘genius’.  For those who live in the world of infinite intelligence, a genius is a person who has discovered how to increase the frequency of vibrations of thought to a point where he can freely communicate with other sources of knowledge: the faculty of the sixth sense, not available by ordinary rates of thought vibrations. The sixth sense is the faculty of creative imagination which normally leads to creative innovations.

What does Kant’s definition tell us about the people in today’s investment world who are most often pegged as geniuses? Indeed, to decide who is to be a genius in matters of money, especially in the investment market place, we need first to understand what is exemplary and original in the financial markets. In the present financial arena the terms ‘original’ and ‘exemplary’ have no universal definitions, making it even more difficult to pick a genius from a bunch of temporary, successful investors and speculators.

Warren Buffet - BOSASA BlogsWarren Buffett is a protégé of Benjamin Graham the author of the book, Security Analysis, who believes that too much of what passes for investing magic is actually speculation – gambling in financial markets. Warren Buffett like his protégé Benjamin Graham-believes that the key to stock-picking resides in an understanding that each share of a company is something more than merely a bet on a share price. Rather, it is an ownership stake in an actual business. Buffett’s genius resides in his willingness to ignore short-term share price changes in-order to focus on deeper measures of value. It takes a genius to distil investment realities from a cloud of investment illusions to maintain sustainable success in the investment markets. He is a value-investor driven by character rather than intelligence. Buffett is more interested in avoiding risk than are most investors and speculators. He states that the basic precept of investment is: Make most, while risking least.

In the financial world, a genius might be described as a person whose investment strategy shows the existence of a deeper logic and insight beyond the market fundamentals and the consistency of above-average returns. But deep logic and insight are rarely measurable. We might never know what is happening in the dazzling mind of a genius but we can see the extraordinary outcomes from his/her brilliance. Science intimates geniuses may be born as such, but they also need to be nurtured for their brilliance to emerge. In the case of Warren Buffett, he was born an ordinary brilliant human but nurtured himself into a financial genius. He maintains a brilliant investment mind together with ordinary human characteristics. Simplicity remains the common denominator in his investment world as well as in his social space. Warren Buffett sits at the crème de la crème of financial nobilities where he is the natural leader. In business as well as social space, Warren Buffett has stuck to old human values of integrity, discipline and humility. He looks downrightly pained when receiving a compliment. For him successful investing and giving to the society are natural occurrences on the roadmap to human prosperity.

Not everybody can be a genius, but no one could be one if he isn’t willing to put in the hours and a very specific kind of effort. There is no road leading to genius world, except through effort. Warren Buffett’s journey in the investment world tells the whole story. Buffett famously made an immense, almost $60 billion fortune by investing in stocks, starting with the Berkshire Hathaway textile company in 1962 and moving on to The Washington Post, ABC and Coke Cola, to mention just a few of his major investments over the years. What makes Warren Buffett investment genius is the longevity of his success. In Warren Buffett one sees the convergence of competitiveness of financial wisdom and investment foresight which makes him a winner in the financial market place in good times and bad times.

Importance of Investing- BOSASA BlogIn the end the mind of an investment genius may be unknowable but at least we can check his investment profile for extraordinary results. Numbers can help us gauge the scale of a genius – although not conclusively-because there is no bench-mark for a real genius. Warren Buffet might historically pass as the best investor ever because in the end, genius is eternal. To find a financial genius you have to look beyond the largest bank account: look into the human character and personality behind his genius. Investing is most intelligent when one has an independent mind like Warren Buffett. He has made investment a calling, not a job. Warren Buffett is a man of spontaneous honesty: he has never tried to pretend to be what he is not. To put it simply, Warren Buffet acts like Warren Buffett. He is the rock of investment wisdom in the global arena.

Warren Buffett – better known as ‘the Oracle of Omaha’ – at the age 83 is still the foremost investor in the world. When he speaks the whole world listens. His audience includes presidents, prime ministers, Noble Prize winners, CEOs of Fortune 500; and countless investment experts and fans. He does not love money. According to him money is an instrument for doing business and for giving.

Warren Buffett looks rather ordinary in the financial world where everybody seeks to be a financial celebrity, and that is the character of a wise investor and a genius. Insightfully, a genius is somebody whose professional or intellectual output or endeavour shows the existence of a rich and deep inner life. He has perfected the art of investing by liberating his mental energy by means of investing. He has never puffed up as an investment genius in the financial markets. In the public space, he has turned out to be admired as a beloved uncle who happens to be a genius.

The power of a single person can be so profound, and nowhere is that more true and relevant than in investing. Warren Buffett has built one of the world’s most successful companies and also known to be great boss. He may be one of the few executives to accomplish such a feat. In acquiring the dozens of companies that make up his $ 315 billion Berkshire Hathaway, Buffett has never contaminated his hands much with the cost-cutting strategies, layoffs, and management shakeups that often follow acquisitions of other investors.

Warren Buffett an incredible blend of extraordinary intellect and business acumen supplemented by imbedded ability to emotionally engage with people at their own levels with integrity and simplicity. He distils essence of investment from matrix of investments illusions in the financial markets. Perhaps the best news is that Buffett focusses on both business and philanthropy. When we think of successful investors, Warren Buffett is probably the first person who comes to mind. He dispenses investment wisdom with the precision of a brain surgeon. He is to investing what Albert Einstein is to science or Mother Teresa is to the service of humanity.

Michael Kachienga

Michael Kachienga

Professor Ogembo Kachieng’a an Electrical Engineer and Biomedical Engineering Scientist. He is a Techno-Financial Consultant and Director of R&D at Watson Corporate University in Johannesburg.
Michael Kachienga

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