Warren Buffett: Individuals Who Ignore These 13 Phrases of Recommendation Will In all probability Make Unhealthy Selections
Recently, while updating my free e-book, I came across a quick quote from one of Warren Buffett’s old letters to shareholders. Warren Buffett predicts the futurewhich you can download here.
It’s stuck with me ever since, and what’s funny is that the 13-word quote isn’t even Buffett’s; Instead, he shares the advice of a 19th-century French philosopher.
Don’t let that drive you away, however. There is nothing academic or anachronistic. In fact, all these years later, it’s one of the more universal and appropriate things that I’ve come across.
This emerges from Berkshire Hathaway’s March 4, 1986 shareholder letter in which Buffett stated his decision to finally give up Berkshire’s failed textile businesses and admitted that despite all the signs that they were not going to work, he had carried on.
The quote comes from the French philosopher Auguste Comte, who lived from 1798 to 1857 and who is credited with developing the field of sociology and positivism. I don’t have the space – or frankly the foundation – to explore Comte’s work here, so let’s just go to the quote.
Buffett admits that other U.S. textile companies were quick to close in the years leading up to his decision, then admits:
“Their owners were not familiar with information unknown to me; they just processed it more objectively. I ignored Comte’s advice – ‘the intellect should be the servant of the heart but not its slave’ – and believed what I preferred to believe.”
I’ve written before about Buffett’s inclination to do thisadmit Mistake, but those 13 words still pop out 163 years after Comte’s death and 36 years after Buffett and Berkshire shut down the company’s textile operations.
The more I’ve thought about them, the more I realize that they succinctly sum up one of the main reasons so many people go on the wrong path in life, pursue the wrong career, or just make bad strategic decisions.
They are the literal opposite of the well-meaning but utterly false advice so many give: In short, “Follow your passion.”
Granted, there has been some revisionism lately as people are realizing that it actually makes more sense to research things that might work in practice and then find those among them that can inspire your passion.
Of course, this more strategic approach doesn’t mean you should never snake or explore.
I think a non-Buffett example will make it clear. This emerges from the 2005 speech the late Steve Jobs gave at Stanford University in which he shared his experience of dropping out of college and then examined courses that interested him free of charge.
What did he care? For one thing, calligraphy, so he studied it. As he explained:
“It was beautiful, historical, artistically subtle in a way that science cannot grasp, and I found it fascinating. None of that had any hope of practical application in my life. But 10 years later, when we designed the first Macintosh computers all came back to me. And we designed everything for the Mac. “
Well, Buffett wasn’t driven by a passion for textiles as Jobs apparently had to do with calligraphy and typography long before he found any practical use for them.
However, it appears that Buffett’s “intellect” was “the slave of his heart” for 20 years because he allowed in other emotions and passions to prevent him from seeing the truth.
Those passions included some things that people might find laudable – for example, wanting to keep the failing textile companies going for as long as possible because they employed so many older workers who had no transferable skills.
But they included others too, like the emotional response that led Buffett to buy Berkshire Hathaway, which had to do with a trifle perceived by the company’s former CEO (and Buffett’s desire to control Berkshire in order to fire him).
Buffett has a reputation for being something of a quote machine and I found it interesting that in this case he traced 150 words back to a philosopher whom I would bet many or most of his readers had never heard of, to express what he was thinking.
However, I suspect this is one of the most obvious jokes among his jokes when you run a business that may be a little smaller than Berkshire:
After all, to what extent could you allow emotions, not passion, to succeed in dictating business decisions?
We all do it sometimes; Hell, the whole point of this exercise is that it took the so-called oracle of Omaha 20 years to figure it out in this case. Just because one misjudgment is common doesn’t mean it’s not worth re-investigating.
Don’t forget the free eBook: Warren Buffett predicts the future.
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