Early this year, Warren Buffett decided to shake up the format of the annual shareholders' meeting of Berkshire Hathaway, the conglomerate he has turned into the world's fifth-biggest company over the past 50 years. He challenged someone who was short Berkshire to come and put the bearish case to his shareholders, who converge on Nebraska each spring to hear 'the Sage of Omaha' dispense his wisdom.
Enter Doug Kass of Seabreeze Partners, who describes himself as "biased to the short side" and presents his ideas on Thestreet.com and CNBC, a US news channel. His good calls include advocating buying stocks in March 2009. He first outlined the bearish case against Berkshire in 2008, highlighting concerns that it had grown too big and unwieldy; faced stiffer competition; and would have to grapple with a tougher economic backdrop in the years ahead.
Kass's questions at last weekend's meeting reflected many of the themes from his article, and as it turned out, he "served more as straight man setting up lines for the crowd favourites", says Dan McCrum in the FT. In any case, it didn't take much bravery for Buffett to invite one sceptic "among the more than 35,000 worshippers who would trample their grandmothers to kiss [his] feet", says Jason Zweig on WSJ.com.
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Still, it's very rare for the management of a major US firm to invite a bear to ask questions, says Zweig. And it underscores how important it is to seek out well-reasoned arguments that contradict your own views, something that "doesn't come naturally to most investors". But it's especially important in a rising market: people then tend to think their own strategy has been vindicated, when in fact the bullish backdrop explains most of their success.
Buffett has always sought out people to explain why he might be wrong, and that "is one of the keys to his success". So expose your ideas to "thoughtful disagreement". When the bull market ends, "you'll be glad you did".
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