Stop Worrying About Survivorship Bias With This One Weird Trick

Warren saw that I was uncomfortable with the nomenclature and language of business. He later told me that I had a kind of “priesthood approach” to business, and seemed to feel that, if I “hadn’t studied Latin and all that, I couldn’t make it into the priesthood.” He didn’t ask me to take anything on faith, but took out his pencil and explained things clearly. He saw that it would be helpful if we demystified a lot of what we were talking about, so he brought with him to our meetings as many annual reports as he could carry and took me through them, describing different kinds of businesses, illustrating his main points with real-world companies, noting why one was a good business and another bad, teaching me specifics in the process of imparting a great deal of his highly developed philosophy. He told me that, whereas Otis Chandler collected antique cars, he himself collected “antique financial statements … [because] just as with geography or humans, it is interesting to take a snapshot of a business at widely different points in time—and reflect on what factors produced change as well as what differentiates the specific pattern of development from others also observed.”

Warren is