Warren Buffett uses the word “magic” a lot when composing Berkshire Hathaway’s annual Shareholder Letter. In addition, Buffett seems to enjoy the action “magic.” Berkshire Hathaway hired magician Norman Beck to “bewilder onlookers” at its annual shareholder meeting gathering, for eleven years. See Warren Buffett "Magic"? (Part I).
OK, but let’s attack this thesis that Buffett seems to have an affinity for the word “magic.” Let’s Google other famous investors, with and without the additional search term “magic,” to see prevalence of the word “magic.”
Curiously, the further you dig, the weirder it gets. Carl Icahn is not magic? Bill Ackman is? And Warren Buffet is in between?
But note that a famous investor’s use of the word “magic” in his own writing is quite different from a third party’s use of the word when describing the famous investor — or investment process — as “magic.” The former shows up on the author’s proprietary website. The latter shows up in Google searches.
Indeed, Bill Ackman, the most magical of the famous investors above, never used the word “magic” in his shareholder communications linked on Pershing Square’s website. Hmm.
That zero count of the word “magic” is confirmed by a Google search of Pershing Square’s entire website for the word “magic.” Zero.
So, why is Ackman associated in Google searches with the word “magic”?
In Warren Buffett "Magic"? (Part I), I demonstrated Buffett used the word “magic” a lot in his Shareholder Letters, so it might not be surprising that the word “magic” shows up on Berkshire Hathaway’s website, 98 times.
“Magic” shows up on Carl Icahn’s website three times, all in the pejorative phrase “magic wand,” perhaps duplicated.
On Gabelli’s website, “magic” also shows up three times, without duplication.
On George Soros’s website, “magic” appears five times, featuring the alliterative phrase “magic of the marketplace” four times.
Has the word “magic” has stealthily crept into the general lexicon of investing? Reviewing Google Trends, and conducting two separate queries of “magic” and “Warren Buffett,” within the Finance category, it is not clear that Google searches for the word “magic” have increased in the Finance category over the last 15 years (Google’s maximum time period). In contrast, searches for “Warren Buffett” have increased.
A Google Trends search for the phrase >"warren buffett" magic< elicits the response: “Hmm, your search doesn't have enough data to show here.”
If dear reader you are like me, you now know a lot more about the use of the word “magic” in financial communications and how surprisingly common “magic” can be, but you may be just as curious as before, asking why?
In the end, I suspect the underlying explanation for Buffett’s use of the word “magic” is his love of theatrics to underscore excellence. The guy who describes himself as tap dancing to work. The guy who draws tens of thousands of shareholders to annual shareholder meetings. Theatrics explains bringing two time US chess champion Patrick Wolff to the annual meeting to play chess with shareholders. Theatrics explains bringing Ariel Hsing, who became the youngest U.S. table tennis national champion in history in 2010 at age 15, to the annual meeting to play ping pong with shareholders. And theatrics explains bringing world class magician Norman Beck to Berkshire’s annual meeting to perform close-up magic for shareholders. A theatrics-loving showman, Buffett loves “bewildering onlookers” with excellence.
Postscript: This exercise was sparked by a Warren Buffett quote about companies that bought back stock while revenues and profits grew, a formula he called magic. To find Buffett’s quote, I searched for “magic” in his Shareholder Letters and realized I was getting lots of hits.
Next post: an anniversary of the best financial journalism article I have ever read.
A form of the word "magic" occurs again, this time in its adjective form -- "magician." The use below is pejorative.
At the Daily Journal annual meeting on February 12, 2020, Charlie Munger said:
"They are really good at it. The ability to mislead people is greatly underestimated. Any good magician can make anybody see a lot of things happening that aren't happening and not see a lot of things happening that are happening. And of course we are all dealing with various people who through practiced evolution have been good at misleading us. And, so, it is very, very hard to be rational and stay sane."
Quote above begins at @ 42:35: https://www.youtube.com/watch?v=HS8neXkNnhw