Collection: Warren Buffett - #72 | What I Learned from Ben Graham and Philip Fisher?



[Transcript]

AUDIENCE MEMBER

Yes. Hi. It’s Jeff Hawthorne (PH), Toronto, Canada. Mr. Buffett and Mr. Munger, you’re both a positive influence on all of us and our generations to come. There were a few significant individuals that had helped to guide your way in the beginning. Could you please share the current percentage of impact and evolution on your investment philosophy and approach between Graham-Dodd’s — Graham and Dodd’s versus Philip Fisher, and comment on each please. WARREN BUFFETT

Charlie, you want to —? If you’ve got it worked out there. Calibrate — CHARLIE MUNGER

Weren’t you — WARREN BUFFETT

Do you want that to tenths of a percent or hundredths of a percent? (Laughs) CHARLIE MUNGER

You were closer to Ben Graham. WARREN BUFFETT

Yeah. Well, Ben — yeah — things would’ve happened — good things would’ve happened with following either party irrespective the other. Graham, obviously, had way more influence on me than Phil. I worked for Ben. I went to school under him. And his — what I call the three basic ideas that underlie successful investing — which is to look at stocks as businesses, and to have the proper attitude toward the market, and to operate with a margin of safety — they all come straight from Graham. I didn’t think of any of those. And Phil Fisher opened my eyes more to the idea of trying to find the wonderful business. Charlie did more of that than Phil did, actually, so you’d have to put Charlie — But Phil was espousing that entirely. And I read his books in the late ’50s, early ’60s. So, you know, I — Phil’s still alive as you know. And, you know, I owe Phil a lot. But I — it doesn’t compare to what I owe Graham. And that, in no way, reflects poorly on Phil. Ben was one of a kind. Charlie? CHARLIE MUNGER

Ben Graham was a truly formidable mind. And he also had a clarity in writing. And we’ve talked over and over again about the power of a few simple ideas thoroughly assimilated. And that happened with Graham’s ideas, which came to me indirectly through Warren, but also some directly from Graham. The interesting thing for me is to watch Buffett the former protégé — and by the way, Buffett was the best student Graham had in 30 years of teaching at Columbia. And — but what happened — and since I knew both men — was that Buffett became way better than Graham. That is a natural outcome. It’s what Newton said. He said, “If I’ve seen a little farther than other men, it’s by standing on the shoulder of giants.” And so Warren may have stood on Ben’s shoulders, but he ended up seeing farther. And no doubt, somebody will come along in due course and do a lot better than we have. WARREN BUFFETT

I enjoyed making money more than Ben. I mean, candidly. With Ben, it just — it really was incidental, at least by the time I knew him. It may have been different when he was younger. But it just didn’t — the process didn’t — of the whole game did not interest him more than a dozen other things may have interested him. With me, I just find it interesting. And therefore, you know, I’ve spent way more — a way higher percentage of my time thinking about investing and thinking about businesses. I’ve probably thought way more about businesses than Ben ever did. He had other things that interested him. So I’ve pursued the game a little — quite a bit — differently than he did. And therefore, measuring the record is really — the two records — it’s not a proper measurement. I mean, he was doing victory laps while I still thought I was out there running against, you know, the whole field. CHARLIE MUNGER

But Graham had some blind spots, partly of sort an ethical professorial nature. He was looking for things to teach that would work for every man, that any intelligent layman could learn and do well. Well, if that’s the limitation of what you’re looking for, they’ll be a lot of reality you won’t go into, because it’s too hard to figure out and too hard to explain. Buffett, if there was money in it, had no such restriction. (Laughter) WARREN BUFFETT

Yeah. Ben sort of thought it was cheating if we went out and talked to the management, because he just felt that the person who read his book, you know, living in Pocatello, Idaho, could not go out and meet the management. So he didn’t — and we didn’t do it. I mean, when I worked for Graham-Newman, I don’t think I ever visited a management in the 21 months I was there. He just — But, you know, he wasn’t sure whether it would be useful, anyway. But if it would be useful, you know, that meant that his book was not all that was needed, that you had to add something to it. I found it fun to go out and talk about their businesses with people, or to check with competitors, or suppliers, or customers, and all that. But — Ben didn’t think there was anything wrong with that. He just felt that if you had to do that, then his book was not the complete answer. And he didn’t really want to do anything that the reader of his book couldn’t do if he was on a desert island, you know, basically, with just one line to a broker. CHARLIE MUNGER

But if you stop to think about it, Graham was trying to play the game of “Pin the Donkey,” wearing very dark glasses. And Warren, of course, would use the biggest search light he could find. (Laughter) WARREN BUFFETT

And we still can’t find any donkeys these days. (Laughter)

OK. Area 1.


(Source: https://buffett.cnbc.com/1997-berkshire-hathaway-annual-meeting/)

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[YAPSS Takeaway]

To see a little farther than other men, it’s by standing on the shoulder of giants.