18912 The Unreasonable Man
G
eorge Bernard Shaw wrote, “The reasonable man adapts himself
to the world. The unreasonable one persists in trying to adapt the
world to himself. Therefore all progress depends on the unrea-
sonable man.”^1
Shall we conclude that Buffett is “the unreasonable man”? To do so,
we must presume that his investment approach represents progress in the
f inancial world, an assumption I freely make. For when we look at the
recent achievements of the “reasonable” men, we see at best unevenness,
at worst disaster.
The 1980s are likely to be remembered as the Future Shockdecade
of f inancial management. Program trading, leveraged buyouts, junk
bonds, derivative securities, and index futures frightened many in-
vestors. The distinctions between money managers faded. The grind of
fundamental research was replaced by the whirl of computers. Black
boxes replaced management interviews and investigation. Automation
replaced intuition.
The late 1990s were, if anything, worse. That frenzied, overvalued
marketplace phenomenon generally known as the dot-com boom went
disastrously bust. Warren Buffett called it “The Great Bubble.” And we
all know what happens to bubbles when they get too big—they burst,
dripping sticky residue on everyone within range.
Many investors have become disenchanted and estranged from the
f inancial marketplace. The residue of the three-year bear market of
2000 through 2002 left many with a particularly bitter taste in their