The Pursuit (and Price) of Original Thought

"All truly wise thoughts have been thought already thousands of times; but to make them truly ours, we must think them over again honestly, till they take root in our personal experience."   Johann Wolfgang von Goethe (1749 - 1832)

Would you pay $650,100 for one meal or $2500 for a used book?  Who was really the "value investor" in those exchanges --  the seller or the buyer?  Who or what could hold such valuable information that does not already exist?  Is there such thing as "original thought?    Ralph Waldo Emerson once said, "Money often costs too much."  When it does, it may be time to ask some questions...

Let's make a few observations and find the application of wisdom...

Rising "value" investor, Mohnish Pabrai, recently paid $650,100 to eat lunch with the greatest value investor of all time, Warren Buffett.  The absolute price is high but only a small pittance to pay for Pabrai's enormous success in modeling his own investment practices after Buffett's.

A hedge fund manager, Seth Klarman, wrote a book called, Margin of Safety: Risk Averse Value Investing Strategies for the Thoughtful Investor.  The book, originally published in 1991 and now out of print, carried an initial price tag of $25.  Less than a year ago, the book was perceived as a "good deal" at $700 and has sold for as much as $2,500.  Does that sound like "value investing?" 

Similarly, Mr. Pabrai self-published less than 1,000 copies of Mosaic: Prospectives on Investing in 2004.  Pabrai first gave away copies to investors then sold some for about $20.  The book is now offered at Amazon for $300 and recently has sold for as much as $2450.

TFP readers know that my primary objective for this blog, put simply, is to seek knowledge that already exists in the pursuit of wisdom.  Along the way, I share that knowledge with others who may find themselves in a similar pursuit... 

I do not believe that original thought exists in absolute form.  After all, knowledge is not "created" -- it is obtained from some other source.  I do believe, however, that existing "wise thoughts" can be presented in an original way and, as Goethe said, "we must think them over again honestly, till they take root in our personal experience..."  Then those timeless "wise thoughts" may become "new" again.  Just asked Pobrai (who followed Buffett who followed Ben Graham, and so on)...  In my estimation, finding today's application to existing wisdom is the only means to creating what may perceived, but not defined, as "original thought."

In summary, those individuals paying thousands of dollars for used books or Pabrai's lunch with Buffett may or may not be "wise."  After all, it was Warren Buffett himself who said "Price is what you pay.  Value is what you get."  It is entirely possible that any given buyer's return from the their "investment" may exceed the price that they originally paid.  Then, of course, the investment is justified... 

My ultimate observation here is not necessarily in questioning the wisdom of the dubious purchase prices paid by individuals for other's knowledge; but it is in my persistent curiosity of human nature and, more specifically, in a financial context, the kind of market environment that must exist to drive such behavior...

TFPAuthor, Kent Thune, is the President and Owner of Atlantic Capital Investments, LLC (ACI), a 'fee-only' Registered Investment Adviser firm located in Mt. Pleasant, SC.