Things Are Looking Up

Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of “great uncertainty.” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain.

Don’t let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective. We are not natively smarter than we were when our country was founded nor do we work harder. But look around you and see a world beyond the dreams of any colonial citizen. Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead.

I’ve excerpted what you’ve just read from Warren Buffett’s February 26, 2011 annual letter to Berkshire Hathaway’s investors. If you’re curious, here’s an interesting little insight into how the company is run:

… Many of our CEOs are independently wealthy and work only because they love what they do. They are volunteers, not mercenaries. Because no one can offer them a job they would enjoy more, they can’t be lured away.

At Berkshire, managers can focus on running their businesses: They are not subjected to meetings at headquarters nor financing worries nor Wall Street harassment. They simply get a letter from me every two years and call me when they wish. And their wishes do differ: There are managers to whom I have not talked in the last year, while there is one with whom I talk almost daily. Our trust is in people rather than process. A “hire well, manage little” code suits both them and me.

Berkshire’s CEOs come in many forms. Some have MBAs; others never finished college. Some use budgets and are by-the-book types; others operate by the seat of their pants. Our team resembles a baseball squad composed of all-stars having vastly different batting styles. Changes in our line-up are seldom required.

All sorts of issues other than optimism are addressed in Buffett’s annual letter (it’s 26 pages long!) if you’re interested in how this multi-billion company runs. I was. Here are a couple of things. He’s now 80 and discusses how his eventual replacement was selected along with insights he’s acquired over his long successful career. He even discloses the rent on their headquaters ($270,212) and equipment costs ($301,363) for everything from high tech stuff to furniture; pretty good cost control for a company valued in the billions.

It reminds me of Seth Godin’s quote “Optimism is hard. But it’s usually worth it.”