Wise Men Rush In Where Fools Fear To Tread: Reflections On The 2023 Berkshire Hathaway Meeting

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“If people weren’t wrong so often, we wouldn’t be so rich.”

Charlie Munger

The untutored human mind is relentlessly irrational.

And blithely indifferent to its own irrationality.

As my first psychiatric attending, a sage Southern gentleman, taught:

“Man ain’t nothing but a slab o’ cortex on a gorilla chassis.”

That irrationality grows exponentially when humans are en masse.

As in markets.

Herd Behavior

When waves of irrational negativity depress the price of the stock of an otherwise valuable corporation possessing a durable competitive advantage a buying opportunity arises.

“You’re neither right nor wrong because other people agree with you.  You’re right because your facts are right and your reasoning is right—that’s the only thing that makes you right.

Warren Buffett

Where in the markets has there been a great wave of negativity?


On April 20, 2021 the price of oil fell to negative $37.63.

Sellers were paying buyers to buy!

Drinks were on the house and came with a tip.

How could this happen?

For decades oil was…

“Black gold, Texas tea!”

—“The Ballad of Jed Clampett, Theme Song of “The Beverly Hillbillies”—Paul Henning

Then came a perfect storm: pandemic-induced stasis and mounting global warming.

Global Warming

Of course reasonable people may differ.

But I live in hilly, snowy, upstate New York.

I treasure my snow tires.

Many’s the time they rescued me and my 13-year-old Camry.

This winter, if snow tires were coworkers, my four blessed Blizzaks would be unemployed.

They tasted snow but once.

“What does that tell you?”—Lee Strasberg as Hyman Roth in “The Godfather II”

Global warming is here.  It’s real.  It’s dangerous.  And it’s not going away.

In the mind of a crowd, somebody’s got to hang for this.

Black gold became “Demon Oil.”

Out with “Demon Oil.”  In with Renewables.

Go Solar.  Go Wind.  Go Electric.

We have and we will.

But not as quickly as fickle humans change their minds.

“Love you one second and hate you the next one.  Oh, ain’t it crazy?”

“Cherchez La Femme,” Corey Daye and Dr. Buzzard’s Original Savannah Band (August Darnell/Stony Browder)

Winds of Fashion

The human mind is whimsical.  Fashions change overnight.

But vast industries cannot.  Oil use is projected to rise in the near term, Tesla and Prius notwithstanding.

“A lot of opportunities in life tend to last a short while, due to some temporary inefficiency…really good investment opportunities aren’t going to come along too often and won’t last too long, so you’ve got to be ready to act and have a prepared mind.”

Charlie Munger

Berkshire Buys Occidental

So why did Berkshire buy Occidental Petroleum Corporation (NYSE:OXY)? 

And buy big!

Doubtless for many reasons, but one reason looms large:

Oil was depressed by the crowd psychology of

“Oil Is So Over!”

But like the disgruntled employee who impulsively quits and shortly realizes they’re broke, the crowd awakened.

We still need oil: lifeblood of power, heating, transport, travel and manufacturing.

So in the brief span before the market returned to reality, a buying opportunity emerged.

And Berkshire wisely took it.

“What gives you opportunities is other people doing dumb things.”

Warren Buffett

Multidisciplinary Thinking: Medical Science

“If you skillfully follow the multidisciplinary path, you will never wish to come back.  It would be like cutting off your hands.”

Charlie Munger

“Everything in moderation, nothing in excess.”

Plato & Co

Like Demon Oil there are medical demons, too.

The models of medical science are eminently rational.

But doctors are people and subject to human irrationality.

That’s why drug company giveaways had to end.

Because, like everyone else, we “rational” doctors can be bought, for a meal and a smile.

And not even know it.

Medical Demons

Modern medicine has two raging demons: sugar and cholesterol.

And just as with oil, both are essential, just “within normal limits,” as we say in the trade.

Sugar, known chemically as sucrose, is composed of two simple sugars: glucose and fructose.

The former is the primary coin of the energy of life. But consumed in excess, so ubiquitous today, sugar contributes to obesity, diabetes, illness and early death.

Yet as every health professional knows, glucose is essential: driven too low we lose consciousness, seize and die.  Even moderately low glucose can cause anxiety, weakness, tremors and confusion.

The takeaway: glucose is essential to health, indeed to survival.

Likewise cholesterol: the central building block of estrogen, testosterone, glucocorticoids and mineralocorticoids.

I shall never forget the angry cry of a crackerjack immigrant Asian pathologist upon hearing ever more scorn heaped upon cholesterol:

“You need that!!”

Inarguably correct.

While an excess of dietary cholesterol or congenital hypercholesterolemia is associated with atherosclerosis, heart disease, heart attacks, strokes and death, cholesterol, like glucose, is essential for life.

Indeed, reduction of blood cholesterol beyond the lower limit of normal brings not improved health, but is associated with irritability, aggression and suicide!

Splitting and Scapegoating

Splitting is black & white thinking: someone or something is “all good” or “all bad” rather than “shades of gray.”

Saints and sinners; angels and devils.

All or nothing thinking. 

Simple and way easier than nuanced and balanced thinking.

We all do it sometimes.

Moreso if stressed or conflicted.

Children excel at it, especially adolescents.

Borderlines and narcissists engage it full-time.

So do crowds, markets, fairy tales and our most beloved movies:

Star Wars: noble Obi-Wan Kenobi fights evil Darth Vader;

Wizard of Oz:  Glinda, Good Witch of The North protects Dorothy from the Wicked Witch of the West

It’s A Wonderful Life: George Bailey saves Bedford Falls from robber baron Henry Potter

Heroes and villains grant way better stories than messy reality.

Oft times the villain is the titular lead: Goldfinger, Dracula!

Sometimes you don’t even need a split, just a scapegoat: favorite tool of demagogues and dictators.

Blame foreigners, minorities, big business, just don’t blame the blamer who will preserve us “good guys” from such menaces.

So while markets were busy splitting and scapegoating—“Great Green Energy” vs “Big Bad Oil”—oil sunk and Berkshire wisely bought.

The markets have awakened, oil has recovered, the S&P 500 is down and Berkshire held steady.

Why am I not surprised?

“Price is what you pay.  Value is what you get.”

Warren Buffett

Full disclosure: writer is long BRK.B, SHEL, XOM, TTE, KMI & BP