Mental Games and Libor Blame - Bloomberg View

Matt  Levine knows  Warren Buffet. You are no  Warren Buffet:



Mental Games and Libor Blame - Bloomberg View

MR. BONDI: Okay. What kind of due diligence did you and your staff do when you first purchased Dun and Bradstreet in 1999 and then again in 2000? 

MR. BUFFETT: Yes. There is no staff. I make all the investment decisions, and I do all my own analysis. And basically it was an evaluation of both Dun and Bradstreet and Moody’s, but of the economics of their business. And I never met with anybody.

Dun and Bradstreet had a very good business, and Moody’s had an even better business. And basically, the single-most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business. I’ve been in both, and I know the difference.

I think a lot about the advantages that investors get by meeting with management teams, and surely any management team would be happy to show Warren Buffett around. But, nah.  He reads the annual reports, thinks about the business, applies a folksy aphorism, and he's in, no meeting -- and certainly no investing staff -- required.