Dear Mr. Buffett_ What an Investor Learns 1,269 Miles From Wall Street - Janet M. Tavakoli [16]
Warren continues to give Wall Street fair warning. In that way, Warren is like Ronald Reagan, who said during his presidential campaign debate with Mondale that he refused to make age an issue:“I will not exploit my opponent’s youth and inexperience.”
By now we were past hungry, and Warren drove the few miles to the restaurant. We discussed some of the personalities I had dealt with when I started my business. Vetting new people takes a lot of time, so I only deal with people I have worked with in the past or who have solid referrals. Clients who know me meet my terms of business. Early on, a large famous pension fund used a ruse claiming it wanted consulting services; all it really wanted was a two-hour conference call with its management, during which it garnered valuable information.That is bad enough, but a consultant loses twice when insult is added to injury. When people owe you a moral debt but do not have a legal obligation, you will get nothing—and worse—they will demean you to suppress their guilt. In contrast, when a client pays a nonrefundable upfront retainer, the client—having already acknowledged your value—rolls out the red carpet. Everyone shows up on time for meetings.
Warren commented that I am in a position that I should not have to deal with difficult people. There are so many good people to work with that it isn’t necessary to spend time with those who do not recognize the value of my services. I had independently come to the same conclusion, but had not decisively acted on it. Warren said the right words at the right time, and furthermore, the words came from the right person. Crash! I tossed a piece of old and heavy baggage out the window of a musty attic in my memory palace.
When we entered the restaurant, the rest of the diners seemed not to notice us, presumably accustomed to seeing Warren Buffett at lunch. We sat down to a meal of roast beef and mashed potatoes. I had already mentioned to Warren that I take thyroid medication and a careful diet helps maintain balance, so I ordered water. The popular press talks about Warren’s love of Cherry Coke. Warren famously asks people to have a Coke—even if they just open it and do not drink it—since “we make money on every twelfth can.” At the May 2007 annual meeting, Warren showed a comedy film skit with LeBron James in which he admonished James: “You will drink Coke.” Perhaps in deference to not having something his guest was not having, Warren ordered water, too. If you must have water, make sure it is Dasani, a Coca-Cola product.
While we discussed not wasting time with people who don’t recognize your value, Warren asked me what I was doing for my personal account. There is a real opportunity cost to dealing with difficult people above and beyond the immediate drain of time and energy. One could be using the time to identify investment opportunities. I am at a stage where I can lose more money in forgone opportunities than I can make on certain types of client work.
Warren seems to feel there is nothing stopping me; I have critical mass. A couple of years after our lunch, I sent Warren a link to a firm that seemed to be borrowing famous names—including Berkshire’s—to lend credibility to its activities. Warren responded that next time they would borrow “Buffett, Bernanke, and Tavakoli.”12 Warren inspires confidence, and his attitude has shifted my own. While it is true that connections bring investment opportunities to one’s door, and men have a much easier time raising money to manage than women in the gender-biased finance world, there are ways around that. Warren was an unknown in the financial world when he began, and I already have a network of contacts. Warren started out with much less money than I have in my own portfolio. In fact, not drawing attention to one’s trades is an advantage,