Essay Questions

How does Alice Schroeder appeal to the Logos of Quantitative Research? What is the implication of the Logos?

Schroeder writes, “Through the late 1990s, BRK (Berkshire Hathaway’s stock symbol) had boosted his profile by outpacing the market, until it peaked at $80,900 per share in June 1998. That a single share of Berkshire stock cost enough to buy a small condo was unique among American businesses. To Buffett, the stock price represented an uncomplicated measure of his success. It had grown in an ascending line since the day he first bought BRK for $7.50 a share. Even though the market had rocked through the late 1990s, until 1999 an investor who bought BRK and held on to it would have been better off.” Schroeder’s declarations are buttressed by a tabular exhibition of the measurable growth of Berkshire Hathaway’s stock performance. The quantitative scrutiny substantively elucidates Buffett’s definite triumph with the Berkshire Hathaway stock. Markedly, Schoeder’s itemization is streamlined which edifies a reader without sufficient financial familiarity concerning the repercussions of stock values.

How does Buffett’s involvement in business affect his family’s wellbeing?

Schroeder explicates, “As late as 1967, Susie seemed to think that Warren would be more attentive to her and the family if he quit working. In her mind, the two of them had an understanding that they would scale back their lives once he made $8 or $10 million. His 1966 fees of $1.5 million and gains on his capital brought the family’s net worth to over $9 million. She badgered him that the time had come. But Warren’s pace never slackened as he shifted his focus from one preoccupation to another: raising money for the partnerships, buying National American, Sanborn Map, Dempster, Berkshire Hathaway, Hochschild-Kohn, American Express, and any number of investments in between. Sometimes his back seized up when he got on a plane, and occasionally Susie had to nurse him for several days while he was bedridden with pain. His doctor couldn’t find any specific cause, suggesting that work or stress might have something to do with it. But Warren was about as likely to stop working for the sake of his back as he was to fork down a big plate of broccoli for the sake of his health.”

Buffett’s ever-escalating marginal utility for ventures encumbers him for allocating time to his family; he cannot balance between his business and family. Suzie reasons that if Buffett discontinues working, they will have satisfactory family time. However, Buffett is resolved on making money which results in the conflicting aspirations between him and Suzie. The millions that Buffett makes cannot be exchanged for family. What is more, his workaholicism unfavourably upsets his health which necessitates Suzie to dedicate time which could have been expended relaxingly with the family, nursing him. Buffett subordinates his family for money which is an indication of money-oriented mind-set with no room for the family. He is not conscious of the veracity that money cannot be substituted for family (which is an immeasurable aspect). Besides, the longing for money cannot be totally mollified.

Explain the implication of Reputational Hazard on Business using the case of Salomon (“The Angry Gods).

Schroeder expounds, “The regulators’ confidence that Salomon could survive on Buffettt’s reputation alone was almost certainly misplaced. Salomon barely survived even after the Treasury partially reversed itself. Some of its biggest customers simply felt revulsion toward the firm. First the huge and influential California Public Employees’ Retirement System, then the World Bank washed their hands of Salomon. Buffettt fell asleep each night with visions of the hundreds of billions of dollars of Salomon debt that would fall due over the next few weeks staggering through his dreams like sickly sheep. He had a sense that, for once, matters were simply not under his control.”

Buffett’s standing is not satisfactory to resuscitate Salomon’s dwindling goodwill. The customers’ and stakeholders’ rejoinders are displays of Salomon’s deterioration which surmise that they would not trust it again. Customers’ conviction in a business is idiosyncratic; hence, not all of them would rely on Buffett no matter his resounding credentials in business. The case of Salomon highlights the quintessence of shielding a business’s repute by all means because once it is misplaced; it would be burdensome to mend it.