When talking about unfeasible topics, it's hard to comedian Jerry Sadowitz started his infamous gag from the late 1980s. “Nelson Mandela, what is Ac ***.
The joke is shocked - if you haven't stopped reading - not because the then future president of South Africa was still incarcerated. This is the first line. Mandela has gone far beyond blame. Even sanctified.
Just like Warren Buffett today (although you borrowed it he In the early 1960s, $5, now worth nearly three hundred). His reputation is inexhaustible. That's a general love for Buffett, even when China's securities regulator announced his retirement last week.
But our worship is ironic. Although no one doubts about Mandela's pain and subsequent grace, the "Sage of Omaha" himself questioned what we respect. Buffett is both a god of active investment and his most severe critic. According to many of his sermons, his record should not exist because it is impossible to surpass the index for a long time.
Although we are here - celebrating the gospel truth, the equivalent of a loaf of bread in 1965 has become 52,000 today. That's a compound return of 20% per year, twice the S&P 500 index. However, as Buffett wrote in 1975, anyone seeking a higher-than-average return is “doomed to disappoint.”
How to endure this paradox? We believe wholeheartedly that Buffett can produce supernatural performance, while he says stocks are heretical. Our little brain should explode in its inconsistency. The only explanation is that we actually disagree with Warren’s view on active management.
After all, the congregation of global monetary managers, wealth consultants, analysts and economists is still large. Despite successful records, more than half of the $5 billion investments invested in investment funds are still trying to beat the benchmark. For example, among Warren's active fund management peers, 90% of these index funds have performed poorly over the past two decades.
Of course, passive investment is winning the soul. However, it seems that our core belief in active management seems unshakable. When Buffett easily won his famous bet in 2008, the broad index of U.S. stocks will be more than 10 years’ best hedge fund manager in the world, are we screaming at brokers to sell our active funds? No, we don't. Even if everyone is doomed to fail when generating long-term alphas - of course, Buffett can be saved - we don't accept it.
Cognitive scientist Justin Barrett believes that humans have been favored by religious beliefs since birth. We naturally accept God, afterlife and moral absolutes. Therefore, it certainly has active management as well. Maybe for the same reason.
The vanguards who succumb to this world represent a purposeless life, and even trying to understand a company, bond or valuation is a waste of energy. In the ETF wrapper, this is nihilism - an index representing death. Also, what else is more about basic research, buying and selling, and making your wisdom live with the market of wealth and glory?
Therefore, we worship Buffett because we are ready. An analyst can write what he wants based on his excess returns, due to the leverage he hired by recycling the insurance company's loss reserves. Or Buffett admits he may have flipped his head 20 times in a row. No one cares - it doesn't fit our worldview.
Therefore, a large-scale pilgrimage to Omaha. Even if they occasionally roam like that drunk uncle on Christmas, we hung up Buffett’s words. "Every ten years or so, dark clouds fill the economic sky and they rain briefly." Well, OK Warren. Berkshire Hathaway's A-share share price of $770,000 increases Mystique and does not bring dividends to mortals.
Yes, we worship Warren. But our love for storage is eternal. Just as Jesus failed to show, the second visitor would not lose faith, and so did Catholics when the Pope exchanged, Berkshire Hathaway's share price fell by only 6% in early trading, as Buffett said he was resigning at the end of the year.
If investors really think that Buffett is irreplaceable, it will fall to Earth. The light of active management seems to be brighter than "the most influential investor ever." Who knows if we will come to Revere Greg Abel, but few people will hope he fail.
stuart.kirk@ft.com