Long ago when I was a young reporter covering the Arkansas legislature for the local paper in Little Rock, there was a line I’d hear in the hallways periodically about the prevailing moral standard some lawmakers lived by when doing the people’s business, called “the do-right rule.”
It went like this: If I’m the one doing it, then it must be all right. This brings us to the subject of Warren Buffett, a longtime adherent to his own version of the do-right rule, which has no particular meaning other than that it is flexible and sounds folksy. The problem with this rule is it works well, until it doesn’t. And lately for Buffett, one of the greatest value creators ever, it hasn’t been working so hot.
Witness the harsh public reaction to the goodbye kiss Buffett planted last week on David Sokol, 54, the head of several Berkshire Hathaway Inc. (BRK/A) subsidiaries who had been widely viewed as Buffett’s successor in waiting.
In his letter disclosing Sokol’s surprise resignation, Buffett praised Sokol’s “extraordinary” contributions. He told how Sokol had bought millions of dollars of Lubrizol Corp. (LZ) stock for himself, shortly before he suggested (successfully) to Buffett that Berkshire buy the company. It was all legal, Buffett opined. Buffett also told us that Sokol had said his Lubrizol purchases “were not a factor in his decision to resign,” as if that were credible.
It wasn’t until the end of his letter that I began wondering if Buffett had lost his mind. “I have held back nothing in this statement,” he said. “Therefore, if questioned about this matter in the future, I will simply refer the questioner back to this release.”
Keep reading here: Warren ‘Do-Right’ Buffett Gives Errant Kiss: Jonathan Weil – Bloomberg.
