1/ This is a good + fair question.
I hope i give a good + fair answer…

Why is BRK (buffett) a different ‘religion’ than TSLA (musk)?

A thread🧵…
2/ The fun thing about making lots of money in VC + crypto + any asset or security that makes money by selling it for more than you paid for it is this:

you don’t NEED it to profitable business—
you only NEED others to buy it for more

A 🔑 difference between TSLA + BRK…
3/ And if you don’t need the business underlying your investment to be profitable 💵(because you just need others to believe that others will believe that others will believe 📈)…

You might not NEED to know 💁‍♂️what actually makes a business profitable….
4/ An entire generation is making money having learned nothing about (as there is + has been no need to learn anything about...) what makes a “GOOD” ⚖️business…

Only thing that matters is the PRICE goes up 📈 and that others believe price will go up based on NARRATIVE📖
5/ Oscar Wilde said the cynic knows the price of everything + the value of nothing

Alas most “investors” today are “speculators” and though they THINK💭 themselves optimists they are actually cynics––as they know the PRICE of everything + the VALUE ⚖️of nothing
6/ “Few.”

Few know how to define

-free cash flow
-owner earnings
-retained earnings
-operating leverage
-return on incremental invested capital

Or read a balance sheet 🧾 or income statement 🧾 or cash flow statement. 📑
7/ The last time there was a rush to get educated👩‍🎓👨‍🎓📚 on accounting + value investing was post 2000 crash leading to boom of long/short hedge funds studying businesses—betting on good ones that could compound capital 📈+ betting against bad businesses who would incinerate it 📉
8/ Over past 14 yrs––“value” investing has underperformed + entire generation has made fortunes 📣 pumping, promoting luring greater fools to buy, to the moon

Speculators need only BELIEF of others to BELIEVE that others will BELIEVE that others will believe––ad infinitum📣
9/ This is the difference between INTRINSIC vs EXTRINSIC value

—latter depends on charisma + cheerleading + influencing strangers

—the former depends on logic + math
10/ Business owners depend on customers––

and the profit 🤝that they make is the value they provide

(for if they provided less value, customers would pay less 🏷 and profits would be lower)
11/ The reason that BRK has a following is it because the culture of character and honesty and integrity is a model for people in their own personal lives.

THIS 📺plays at every BRK annual meeting

If there is a religious element––
it is community at the altar of MORAL CHARACTER
12/ Contrast this kind of public moral leadership from Buffett with recent examples of Elon + TSLA

-tells SEC to blow him
-obsessed with critics
-calls a rescue hero a “pedophile”
-paid $40M for lying + faking a buyout
-paid a record $137M settlement for racist discrimination
13/ Fans + believers admire Elon
But for his irreverence + impulsivity

In contrast the reason people admire BRK
is they behave with DECORUM with RATIONAL decisions

The best case study is a candy store.
Buffett’s investment in See’s Candy…🍫
14/ For Buffett’s dream biz:

-is boring
-earn huge returns on tangible assets
-has more profits than any competitors
-gets most of its sales in a few states
-has ~50% of entire industry earnings
15/ When Buffett bought See’s Candy in 1972 for $25M in they made 16M lbs of candy with sales of $30M and pretax profits <$5M.

It cost $8M a year to run the biz.
Thus earning 60% on invested capital.

By 2007…
16/ By 2007 they sold less <2x that ~31M lbs
(growing only 2%/yr)

Sales were up from $30M to $383M
and pretax profits were $82M.

It cost $40M to run the biz.

Meaning they only had to REINVEST $32M––since 1972.

And the business delivered $1.35B of pretax earnings…
17/ And the business delivered $1.35B of pretax earnings…

with ALL OF IT––except that tiny incremental $32M needed to run the biz––going to Buffett to buy OTHER GREAT BUSINESSES.

(Great business that earned profits on invested capital and could be reinvested)…
18/ What Buffett did NOT need?

📣 Promoting or pumping
or depending on ANYONE
to buy his shares or price them higher

Because he OWNED legitimately amazing businesses that produce cash 💵 by the💰

He owns 100% of his best biz’s
+ requires NO EXTERNAL capital

That is WHY 🙏🤲

That is the difference between the “religion” and disciples of

Buffett (who are students of logic + math, reason + rationality + moral character in business + family life)

And those of Musk or Tesla or any purely pumpy speculative movement,

As poet rev. MC Hammer said:
20/ Original Buffett letter excerpt from 2007 ImageImage

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More from @wolfejosh

24 Nov
1/ Interesting POV from Chinese billionaire friend
who made his money outside of China
and felt safe from reach of Xi (as he invested in China,
but sold his companies to non-Chinese so he never ‘took money out’ of China).

He got the #’s wrong but the point was clear…
2/ He asked me the first “democracy”.
I answered: Greece.

He said what was population of your great democracy
i said ~150,000

He asked how many were slaves? I did not know.

He said: ~100,000 slaves rules by ~8,000

Now what about your beloved Rome?
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I guessed roughly correct 1M

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I guessed 10k. He said it was closer to 500k around 50% of the population.

He asked––rhetorically––what the current population of “democracies” in the world today?
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And literary pulse of @sfiscience
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1/ Releasing a redacted Lux quarterly letter to LPs.

Some strong views of
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(preview: LP indigestion)
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2/-The importance of HEIGHTENED HUMILITY in times like these (where source of ‘success’ can be easily mistaken)
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Which of the 2 paragraphs below do you expect to read in Q3 2022?
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1/ Holy $#@&.
Cold War with China just escalated.
Was NOT on my Bingo card.

A story in 3 tweets.
2/ #2
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Phew at least he did not call Taiwan a country)...
3/ And...Celtics' NBA game completely gone in China.
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