246 THE INTUITIVE INVESTOR
people whom he trusts. In this sense, Buffett relies heavily on his
intuitive ability to size up the character of business partners. Facts
and logic (left-brain items) could help Buffett eliminate certain
potential partners (the ones with shady records), but they could
never confirm that someone would be trustworthy in the future. A
leap of faith, based on intuition, is required for that.
Intuition also allows today’s portfolio managers to operate more
quickly, without assembling all the available information. Legend-
ary investor Charles Merrill (of Merrill Lynch fame) commented
on this phenomenon. He said that “if he made decisions fast—
intuitively?—he was right 60 percent of the time. If he took his
time and analyzed a situation carefully before reaching a decision,
he would be right 70 percent of the time. However, the extra 10
percent was ‘seldom worth the time’” (Weintraub, The Hidden
Intelligence, Butterworth Heinemann 1998).
The business leaders who run the major companies in which
portfolio managers invest are also recognizing the importance of
intuition. Bob Galvin at Motorola is a good example: “[H]is intu-
ition told him that wireless communication would be a gigantic
opportunity for the future, although he had no strong data to
support this” (Weintraub, The Hidden Intelligence). After a long
battle with his skeptical board, Galvin prevailed. The company
redirected its efforts into one of the most profitable industries in
the century.
Cutting to the chase, two researchers—John Mihalsky and E.
Douglas Dean at the New Jersey Institute of Technology—exam-
ined the impact of intuition on the corporate bottom line. (Let’s get
serious—after all, as investors, isn’t the bottom line what we really
care about?) They found that 80 percent of the CEOs whose prof-
its doubled over a 5-year period were found to have above-average
intuitive powers. The explanation for success? Intuitive people, as
Einstein said, possess superior insight. They can reach solutions by
leaps and bounds rather than waiting for all the data to be ana-26-29 ware 246 1/19/01, 1:20 PM