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The Power of Leadership

October 8th

Loss of focus is what most worries Charlie and me when we contemplate investing in businesses that in general look outstanding. All too often, we’ve seen value stagnate in the presence of hubris or of boredom that caused the attention of managers to wander.

Warren Buffett

Investing is not solely a financial decision. It's a human one too. It requires considering not just a company's earnings, market shares, and growth rates, but also the character of its leadership. A company might appear promising on paper, but under misguided leadership, it can falter.

The danger often comes from subtler foes -- hubris and boredom. Hubris, or excessive pride, can cause leaders to overestimate their abilities or underestimate their competitors, leading to the stagnation of company value. Boredom, on the other hand, can cause a loss of focus and subsequently allow the company's value to decline.

Resisting the lure of hubris and combating boredom are not just tasks for company leaders, but also for investors. It's important to recognize these traits and their potential impact on a company's future. An investor's task is to ensure that the leaders of the company they invest in have the humility to recognize their own limitations and the passion to remain focused on the task at hand.

In the world of investing, the quiet, consistent effort is often the most rewarding. It is these unassuming, often overlooked decisions that form the bedrock of a solid investment portfolio. Let us value long-term sustainability over momentary success.

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