The Brothers Buffett

This week I had a crisis of conscience — “conscience” is perhaps putting it strongly, but what else does one have a crisis of? — and considered prematurely ending this project. Why? Lots of reasons, mostly related to ego (and net-worth) damage.

But as I wrestled internally, I paid attention to signs from the Brothers. Today I’m discussing them, and at the same time trying something new: merging 1985′s letter and Coconut Telegraph into one unholy Buffett buffet.

Let me set the stage: I’ve got Coconut Telegraph on the hi-fi; 1985′s letter, the longest to date, stacked in front of me; a glass of port in my hand. I’m the man your man could smell like.

Overview

Yup. That's me.

1985 was a monster year for Berkshire: 48.2% gain in net worth, a figure Warren says he’ll not again see in his lifetime. Fitting: Coconut Telegraph features something Jimmy never again sees in his lifetime: a solo song on the charts. Warren’s broader point is that Berkshire simply has too much money to keep seeing these returns — for instance, it will now need to generate $5.7B over the next ten years to maintain 15%. To put that in perspective: it’s $5.7 BILLION, you don’t need any perspective.

Essentially: Berkshire is too big to succeed (“Too big to succeed” is my next song, by the way, about childhood obesity and junior olympics). “An iron law of business is that growth eventually dampens exceptional economics.”

This seems to be the same thing we see with Jimmy here. He’s coming off his peak: three straight top-20 albums (his only top 20 appearances so far), all big sellers — two platinum and one gold (his only platinum/gold so far). No artist, even one as maniacally diffuse as Jimmy, can maintain this kind of staying power, and Coconut Telegraph is — make no mistake — a reduction in returns.

(The question is this: have I reached my peak, uninspiring as it may be, with this project? Let’s read the signs.)

Sign 1: Textiles.

Okay, seriously. The short story here is that Textiles, despite Warren’s undying (ha, till now) faith, stopped turning even a small profit. Like five years ago. And then, finally, eons after the rest of the industry realized this (250 mills closed ahead of Berkshire’s), WB came to his senses. Textiles was thus liquidated in 1985. Liquidated. Not even sold. That’s how badly Warren played this one.

And don’t tell me that this — Warren’s lesson learned — doesn’t scream straight at me:

“Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

Cough.

Sign 2: “The Good Fight”

Let’s be frank: Coconut Telegraph is not a very good album. I believe I will say this even in a month, despite prior recanting.”The Good Fight” is an almost tolerable track, with a near-reggae vibe (reggae through a Nashville filter, I guess), but it’s pretty repetitive and overall uninteresting. And an emerging JB theme: the more I pay attention to his lyrics, the less I like his music.

But: “The Good Fight” was co-written by J.D. Souther, longtime Eagles contributor who wrote some of my favorite songs ever — “New Kid in Town,” “Best of My Love,” “Victim of Love” (a song I have sung in an audition before, even) — so I have to pay some attention.

Here’s what “The Good Fight” tells me, when I actually listen to some of the words:

You got to go the distance
If you want to fight a good fight
Good fight
Keep it up and keep a good fight

Got it. The distance. Keep it up. Good fight?

Screw your leaky boat, Warren.

Sign 3: “Three Very Good Businesses (and a Few Thoughts About Incentive Compensation)”

To condense space in 1985′s letter Warren combines his writeups of See’s, Nebraska Furniture Mart and the Buffalo News with some random thoughts about stock option compensation. He considers these strange things to assocate, and thus precedes this section with the following paragraph. (I kid you not.) The emphasis is painfully mine.

“When I was 12, I lived with my grandfather for about four months. A grocer by trade, he was also working on a book and each night he dictated a few pages to me. The title — brace yourself — was ‘How to Run a Grocery Store and a Few Things I Have Learned About Fishing.’ My grandfather was sure that interest in these two subjects was universal and that the world awaited his views. You may conclude from this section’s title and contents that I was overexposed to Grandpa’s literary style (and personality).”

My sad little readership Venn diagram.

Is there anything that better characterizes my project here than the belief that “interest in these two subjects was universal and that the world awaited his views?” Oh, the hubris!

What I’ve  struggled with most of late is the realization that while some combinations of unrelated things are magically additive (I’m thinking of course of the broccoflower, or Bud Light Lime), others are, well… not.

Right to the bone, Warren.

Sign 4: “Growing Older But Not Up”

This is another song, like the original “Livingston’s Gone to Texas,” that belongs in the opening credits of an 80s sitcom. It’s both cheesy and undeniably catchy — it’s like a full-length Silver Spoons theme. (Is that in your head yet? Give it time.) It also features the seemingly-profound-but-really-just-convenient refrain “I’d rather die while I’m living than live while I’m dead.”

I could take this song either way. In true Jimmy style, if I’m not having any fun with this project, I should start, well, “dying” while living. I can write posts for nobody to read when I’m actually dead. In the meantime let’s zip off to Key West and fire up the Bud Lime.

On the other hand, I could see myself — as Jimmy does in verse two — as a manatee:

Sometimes I see me as an old manatee
Heading south as the waters grow colder
He tries to steer clear of the humdrum so near
It cuts prop scars deep in his shoulders
But that’s how it goes, right to the end
Though his body’s quite flexible that
Barnacle brain don’t bend

(Those are the actual lyrics from the song. And there is lovely harmony on “barnacle brain don’t bend.”)

That is, I can stubbornly plod along — ignorant of the boat engine of irrelevance threatening nearby — until this thing is finished. Like the manatee. The beautiful, graceful, prop-scarred manatee.

I’m going to go with that one to keep my convenient back-and-forth structure of this post intact.

Sign 5: 13,770

That’s the number of words in 1985′s letter. (Warren’s first in 1977? 3100.) I am at nine of 32 and the prospect of an ever-increasing word-count about the decades-old travails of Berkshire Hathaway sometimes is too much to bear. Let me detail for you what else 1985 contains:

• Warren explains why BRK’s capital-building efforts in insurance have finally started to pay off: they have the reserves to be trusted in a sea of duplicitous underwriting competition. Also, “reinsurance” firms — these are firms that insure the insurers (not to be confused with re-reinsurance firms, which insure the firms that insure the insurers) — have been getting burned by insurers who offloaded too much risk while enjoying fat near-term underwriting profits. This has reduced the capability of insurers to get more reinsurance, while Berkshire’s insurance arms have no problem.
• Warren lambasts the practice of stock options, largely because they incentivize blindly — both via rewarding revenue increase without factoring-in capital required (or the earnings retained), and by rewarding people not necessarily instrumental in affecting business success. A savings account will generate continual revenue, so a laggard can enjoy the fruit of his options by doing very little to create increased “earnings.” WB thinks the folks who deliver real, major contributions should be rewarded, yes — in “filthy lucre,” and can then decide to buy stock if they so choose.
• Warren repeats numerous times that bargains in the market are gone. “Today we cannot find significantly-undervalued equities to purchase… The current situation is 180 degrees removed from that existing about a decade ago.” Great. So when the Hot Tub Time Machine takes me back to 1986, I’m still screwed.

If you’re counting, that’s my second Hot Tub Time Machine reference of the project. Room for one more?

(And yes, that was my none-too-clever way of still summarizing 1985 in this 2-for-1 post.)

Sign 6: The Inconsistency of Jimmy

…is driving me nuts.

JB is more and more bedeviling. Where Warren is irascibly consistent, Jimmy is anything but. The man who can write “The Weather Is Here, I Wish You Were Beautiful” — an okay song with a great title — and very nearly clever lyrics in “Islands” — the best song on Coconut Telegraph, thanks to a simple, lovely chorus — is the same man who affects a Jamaican lilt yet again for “Coconut Telegraph” (“Sayin’ who did dis and dat, dis and dat…”), confirms for his daughter numerous times in the treacly “Little Miss Magic” that “your mother is the only other woman for me” (in case there was any doubt), and then proceeds to nearly destroy the aforementioned “Islands” (along with half the album here) through continued indulgence in harmony, strings, and slathered-on emotion.

In This is Spinal Tap the band’s amp famously goes to 11. I swear of late, it’s as if Jimmy has an “overwrought” knob that goes to 47.

The Final Sign

And then, hopeless and distraught, I come across “It’s My Job.”

Reader, I cannot quantify for you the ridiculousness of this song — this is the one that charted, though, so neither can I quantify the ridiculousness of the music-appreciating public of 1981 — but it in essence is a torch-song paean to… doing one’s job.

Be you janitor or overly-stressed, family-less bank-owner or world-famous musician: it’s your job. I will put the full lyrics below so you can appreciate, but suffice to say that compared to the gritty inspiration projected by “It’s My Job,” Bob Seger’s “Like a Rock” is a dose of Ambien.

But the power of music to speak straight to one’s soul cannot be ignored:

It’s my job
To be different than the rest
And that’s enough reason to go for me
It’s my job
To be better than the best
And that’s a tough break for me.

You’ve got to hear it. Here’s a legal sample: (and then go buy it here)

To be continued… for at least 22 more weeks

So what’s keeping me going?

Both Warren and Jimmy in the early 80s had every reason to slow down, and to fail. Warren had made enough money for himself and his investors and could have plodded along with a modicum of effort — like those options-earning laggards. Jimmy, quite frankly, probably ran out of talent — and he was already on the beach, for God’s sake.

But they kept at it, each managing to evade the realities in front of them: Jimmy avoided the charts for two decades, but subsequently built a conglomerate based on a single song. Warren’s outmatched his biggest critic — himself — for an additional 25 years.

Why? It was their job. And like it or not, it’s my job here to be different than the rest. And that’s enough reason to go for me.

Good God, I just quoted a Jimmy Buffett lyric quasi-seriously. Sign 8.

Here, this is better: Together, we’re gonna find our way. Together, taking the time each day. You (Jimmy) and you (Warren) and you (reader) and I.

Together.

My song ratings from iTunes:
A “3″ means I would be okay hearing the song again.

Average iTunes Rating: 2.1

Coconut Telegraph [2]
Incommunicado [2]
It’s My Job [2]
Growing Older But Not Up [2] (really, 2.5)
The Good Fight [2]
The Weather Is Here, I Wish You Were Beautiful [2]
Stars Fell on Alabama [2]
Island [3]
Little Miss Magic [2]

In the middle of late last night I was sittin’ on a curb
I didn’t know what about but I was feeling quite disturbed
A street sweeper came whistlin’ by
He was bouncin’ every step
It seemed strange how good he felt
So I asked him while he swept

He said “It’s my job to be cleaning up this mess
And that’s enough reason to go for me
It’s my job to be better than the rest
And that makes the day for me”

Got an uncle who owns a bank he’s a self made millionaire
He never had anyone to love never had no one to care
He always to seemed kind of sad to me
So I asked him why that was
And he told me it’s because in my contract there’s a clause

That says “It’s my job to worried half to death
And that’s the thing people respect in me
It’s a job but without it I’d be less
Than what I expect from me”

I’ve been lazy most all of my life
Writing songs and sleeping late
Any manual labor I’ve done purely by mistake
If street sweepers can smile then
I’ve got no right to feel upset
But sometimes I still forget

Till the lights go on and the stage is set
And the song hits home and you feel that sweat

It’s my job to be different than the rest
and that’s enough reason to go for me
It’s my job to be better than the best
and that’s a tough break for me
It’s my job to be cleaning up this mess
and that’s enough reason to go for me
It’s my job to be better than the best
and that makes the day for me