Warren Buffett said at the Berkshire Hathaway 2018 Annual Shareholders Meeting that he would rather hire someone who truly understands Benjamin Graham's book — The Intelligent Investor — over a top business school graduate.
At the 2018 Berkshire Hathaway Annual Shareholders Meeting, Warren Buffett said:
"I would rather have a person... if I could hire somebody among the top five graduates of number one, two or three of the business schools, and my choice was somebody that had — was bright — but had chapter eight of The Intelligent Investor absolutely... it just was natural to them, they had it in their bones basically, I’d take the person from chapter eight.
This is not... what we do is not a complicated business. It’s got to be a disciplined business, but it is... it does not require a super IQ or anything of the sort... and there are a few fundamentals that are incredibly important, and you do have to understand accounting.
But it just doesn’t require advanced learning."
In The Past
Buffett has made no bones of his disdain for academics in the past.
In his 1984 talk The Superinvestors of Graham-and-Doddsville, Buffett said:
"If it doesn’t make any difference whether all of a business is being bought on a Monday or a Friday, I am baffled why academicians invest extensive time and effort to see whether it makes a difference when buying small pieces of those same businesses.
It isn’t necessarily because [price and volume] studies have any utility; it’s simply that the data are there and academicians have worked hard to learn the mathematical skills needed to manipulate them.
I’ve never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn’t seem to be a matter of IQ or academic training. It’s instant recognition, or it is nothing.
The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It’s likely to continue that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper."
Closing RemarksBuffett ended this year's talk on a more generous note though, saying:
Munger, however, was less generous with his closing comments on the subject and said:
"I don’t know whether I would have done better or worse if I’d just quit after high school, you know, and read the books I read and all of that.
If you run into a few great teachers, and they really change the way you see the world to some degree, you know, you’re lucky... and you can find them in academia and you can find them in ordinary life."
"I finally figured out why the teachers of corporate finance often teach a lot of stuff that’s wrong.
When I had some eye trouble very early in life, I consulted a very famous eye doctor and I realized that his place of business was doing a totally obsolete cataract operation. They were still cutting with a knife with better procedures and I said why are you in the great medical school performing absolute obsolete operations. He said it’s such a wonderful operation to teach.
Well that’s what happens in corporate finance, they get these formulas and it’s fine teaching experience. You are given a formula, you are presented with a problem, you apply the formula, you get a real feeling of worthwhile activity. There is only on problem, it’s all balderdash.
Buffett and Munger have expressed similar views on academic theories in the past as well.