Assign Yourself A Story

“I assign myself the right story," said Warren Buffett. "[Investing] is nothing more than that.”

Last week, the world bid farewell to cinematic legend Robert Redford. Among his most celebrated roles was his portrayal of Washington Post reporter Bob Woodward in the political thriller All the President’s Men.

Any mention of Woodward’s name brings to mind one of my favorite investment lessons from Warren Buffett. One that he shared directly with Woodward himself in the 1970s after Berkshire Hathaway purchased a significant stake in the newspaper.

Woodward, flush with money and fame from his Watergate coverage, sought Buffett’s advice (as well as a few hot stock tips) on what to do with his newfound fortune. And, true to form, Buffett politely sidestepped the question — telling Woodward that he’d never deprive him of the joy of discovering those answers for himself.

Everyone must do their own homework and make their own investment decisions. But, he added, Woodward’s day job as an investigative reporter — piecing together fragments of information until the full picture emerges — would make that process a whole lot easier.

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Warren Buffett saw a striking similarity between his work in the money game and Bob Woodward’s brand of investigative journalism. “Basically, newspeople and I are in the same business,” he told the Omaha Press Club in 1992. “I go out and try to report, essentially, on a company. I try to evaluate its management, I try to evaluate its competition, its product, its service, its prices, its costs, everything. I’m trying to do a reportorial job on that business — and that is my job.”

“I assign myself a story every morning when I come to work.”

And that story is always the same: What is this company worth?

Buffett urged Woodward to approach investing with the same rigor as he does his reporting. “Imagine [Washington Post editor] Ben Bradlee said to you, ‘What is the Washington Post Co. worth?’ What would you do if you have to write the story in a month? You’d go out and interview TV brokers and newspaper brokers and owners and you’d try to value each asset.”

“That’s what I do,” continued Buffett. “I assign myself the right story — and it’s nothing more than that.”

What does “assigning yourself a story” mean in practice? Well, thankfully, Buffett elaborated on the process at Berkshire Hathaway’s AGM in 1999. To start, he recommended picking out a few companies “where you feel quite familiar with their products — but not necessarily so familiar with their financials”.

Then, it’s reading time. “Get lots of annual reports,” said Buffett, “and get all the magazine articles that have been written on those companies for 5-10 years. Just sort of immerse yourself as if you were going to buy the whole business.”

“Essentially, you’re being a reporter. It’s very much like journalism.”

Buffett also likes to employ the “silver bullet” question — inspired by Intel co-founder Andy Grove. Ask a company, “If you had a silver bullet and you could only put it through the head of one of your competitors, which one would it be — and why?”

“Just keep asking and asking and asking,” said Buffett. “You’ll have to discount the answers you get in certain ways, but you will be getting things poured into your head that then you can use to … evaluate this business.”

“It’s an investigative process. It’s a journalistic process. And, in the end, you want to write the story. Six months later, you want to say the XYZ Company is worth this amount because…”

Charlie Munger called “Why?” the most important question of all. And he wasn’t just talking about investing here, either. “It applies to the whole human experience,” he said. “If you want to get smart, the question you’ve got to keep asking is: Why? Why? Why? Why? And you have to relate the answers to a structure of deep theory. You’ve got to know the main theories. It’s mildly laborious — but it’s also a lot of fun.”

This relentless pursuit of “why” is what connects Buffett’s boardroom to Woodward’s newsroom. Both men, in their own way, are chasing the truth — whether it’s the value of a company or the inner workings of government.

More than anything, this approach — treating valuation as a journalistic exercise — demystifies the often intimidating world of investing. (Which, some might say, is one of Warren Buffett’s most precious talents.) Investing is not so much about arcane formulas and macroeconomic prescience, but rather the dogged pursuit of answers and information.

You don’t need an MBA or a Bloomberg terminal to invest like Buffett. You just need curiosity, patience, and a reporter’s instinct to keep digging.