Dear Mr. Buffett_ What an Investor Learns 1,269 Miles From Wall Street - Janet M. Tavakoli [2]
I graduated with a B.S. in chemical engineering from the Illinois Institute of Technology, and got married five days after graduation. I worked as a chemical engineer, and a couple of years later (in 1978), I moved to Iran with my Iranian (and now ex-) husband. Our timing couldn’t have been worse. Six months after we arrived, Iranians deposed the Shah, and the Ayatollah Khomeini returned to lead an anti-American, repressive theocratic government. I returned to the United States carrying one suitcase of clothing and $1,000. My husband remained in Iran with his wealthy family. He returned to the United States a few years later to start a business with his father’s help, but by then, he was my ex-husband. I had lost my possessions and savings, but my true wealth is portable and remained on my shoulders. I worked as an engineer by day and received an MBA from the University of Chicago’s Graduate School of Business night program, where I later taught derivatives part time.
Just because one is an expert in complicated financial products like derivatives, it does not mean one is good at value investing. (But it doesn’t mean one is bad at it, either.) Although I had read a lot on the subject of value investing, I had not really absorbed it, and I had not diligently practiced it when making investments for my personal portfolio. Then I took a trip to a city 1,269 miles from Wall Street, and my perspective changed.
Harry Truman once said: “The only thing new is the history you don’t know.” I thought I knew a lot, until I met Warren Buffett. In June 2005, I received a letter from Warren Buffett inviting me to visit him in Omaha. A few years earlier, I had sent him a copy of a book I wrote on credit derivatives with a letter stuffed between the pages. It was a pleasure to receive his invitation; but I delayed in responding to him, even after learning that lunch with Warren Buffett went for $202,000 in 2004 and $351,000 in 2005 in charity auctions on eBay (the winning bid in 2008 was $2.11 million, and the proceeds benefit the Glide Foundation, a charity dedicated to helping the poor and homeless get back on their feet1). I am glad I didn’t delay our meeting longer because when I finally met Warren Buffett, I came to realize that I still have a lot to learn. Truman is right that we can learn a lot from history (Buffett’s annual letters to Berkshire Hathaway’s shareholders), but Warren Buffett also taught me that I can learn new things about evaluating the present to improve the odds that the future will be better.
This book is about my meeting with Warren Buffett on the eve of the greatest market meltdown in history and how meeting him subtly changed the way I look at the global financial markets. I already knew the principles, but meeting Warren encouraged me to think about all financial products in a Benjamin Graham-style framework.
I also changed the way I invest. I have no illusions that I am in the same league with Warren Buffett, but I improved after I met him. Buffett’s successful track record spans a half century, so you’ll have to check back with me in fifty years to see how well I performed to use him as a benchmark. But you will have to do the measuring. I don’t measure myself against benchmarks any more than Buffett does. Instead, I focus on value.
Benjamin Graham was Warren Buffett’s mentor. Over time, Buffett applied and interpreted Graham’s framework to his own unique investment style.This book is not about Graham’s ideas or Buffett’s ideas, it is about my reinterpretation of my own ideas about the financial markets as I looked through the lens of the value framework of Benjamin Graham and Warren Buffett.
My ideas and conclusions are my own and may differ somewhat from Warren Buffett’s. No two people think exactly alike; that is what makes a