Buffett has always been an advocate of reading as much as possible. Each thing you read adds another bit of information to that wonderful tool called the brain. Now there is still a lot to learn about the brain, but having significant sources of information in the brain seems to help the brain to make better decisions. No one really knows much about how all that information is triangulated and connected within the brain, but the end result is treasure trove of knowledge that can foster better decisions.
The portfolio manager’s primary job is to achieve returns on their portfolio. The better knowledge base they have available, the more tools they have to improve returns. Reading is the fundamental way that the knowledge is collected. Once the information is collected, they think and reflect upon it to understand relationships to their existing knowledge base. Covey would refer to this process as “sharpening the saw”.
Unfortunately, many portfolio managers are waylaid into detours by small segments of their clients. Like any organization I have been involved with over the years, there is always a small verbal segment that has a constant need to be heard. While it is ok to have your opinions heard or addressed at times, this segment’s constant clamor defers their portfolio manager from their primary objective which is to focus on getting the best returns.
Did you ever try to clean up a room while several toddlers are playing? With every step forward, you are pulled two steps back as they pull out more toys. It can be frustrating. It takes you off course on your objective to clean the room. Mental and physical exhaustion sets in. This is equivalent to a portfolio manager trying to focus on improving returns while constantly being browbeat by a segment of investors.
Buffett insulates his two portfolio managers from this constant clamor. Thus, allowing them to read constantly, as well as, think and reflect on the relationships of all the information they have read. This helps them make better decisions. The added benefit is that they are not worn out and stressed dealing with the noise and can focus on their primary objective.
Overexerting physically can tap out your body physically and lead to degradation of your physical health. Mental overexertion caused by stress can also degrade your mental capacity. Thus, your decisions become sub-optimal.
I have met some very smart people in my life. They were not all formally educated, but the common thread is that they read many things to build that knowledge. You don’t have to have a degree to be educated, but you do have to read.
Don’t fool yourself – Reading is fundamental!
