Closing the on-ramp
On winter storms, growing up like Warren Buffett, and the lessons taught by automatic gates beside the highway on-ramp
One of the factors Warren Buffett has credited for his extraordinary investing success is that he lives far away from Wall Street. The conventional wisdom would hold that living close to the center of the world's financial action would be the way to enhance success, but Buffett took the opposite tack, as documented in books like Steve Jordon's "The Oracle and Omaha: How Warren Buffett and His Hometown Shaped Each Other".
■ The aspect of this choice that is cited most often by Buffett and others is that being geographically remote from the stimulation of the capital city of finance helps to cool the tempers, making it easier for an investor like Buffett to resist a herd mentality and to hold off from making investment decisions until the rational case is the overwhelming influence, not the heat of the moment. But there is good reason to believe that having "space to think" is only part of the story. The powerful winter storm sweeping through the Midwest tells another part of the story.
■ Lots of places have their own variations on severe weather, but much of the Midwest is notable for having barriers that can block access to highways during hazardous winter weather. Every summer, they stand beside on-ramps, sadistically reminding the locals of the passage of time and the inevitability of next winter, like red-and-white-striped Swords of Damocles.
■ The barriers -- often automated so they can be closed remotely -- are too expensive to be installed merely for decoration. They are working tools, and in many places they are used several times per winter.
■ Winter weather that grinds activity to a complete halt is, in a place like Omaha, both haphazard (possible anytime from October through April) and nearly certain (consult any school calendar with "snow days" built-in). Even a kindergartener in the Midwest gains an atmospheric understanding that sometimes things will go sideways, and it's not up to us to decide when.
■ Warren Buffett has famously structured his company so that he never puts the entire thing at risk. Even in buying the BNSF railroad for $34 billion in 2010, he only put about a quarter of Berkshire Hathaway's $131 billion in shareholders' equity at risk.
■ A person might be able to learn that kind of caution from a textbook, but it seems more than trivially possible that it can be imprinted on the attentive young mind -- one that notices that powerful things can happen well outside our intentions, and that being sporadic doesn't make them less inevitable. Not everyone is primed to learn those lessons, and they can be learned in places where monuments to uncertainty don't stand beside every highway on-ramp. But it probably doesn't hurt to have those reminders close by.