The Best of ?Woodstock for Capitalists,? Part 3 The Most Logical Answer

The Best of ?Woodstock for Capitalists,? Part 3: The Most Logical Answer

The Midas Touch; Good Businesses and Bad Businesses; and Moats Filling Up with Sand.

?Years ago you warned against utilities,? began the second-to-last question of the day, from a Costa Mesa, California shareholder. (Shareholders picked by lottery alternated with questions submitted to, and read by, reporters.) In light of this, the investor asked, why was Buffett was pouring so much money into the things.

She was referring to Buffett?s long-held distain for capital-heavy and government-regulated businesses, which can be traced at least as far back as John Train?s 1987 Buffett book ?The Midas Touch??possibly the first and still one of the best of the dozens of ?How Warren Buffett Does It?-style books out there.

The fact that Train?s book remains remarkably current 22 years after publication is no small a testament to how little Buffett?s investment criteria have changed over the decades. In fact, half the chapter titles would fit a brand-new ?How Warren Buffett Does It? book published in the year 2009?including ?GEICO,? ?Good Businesses,? ?Bad Businesses,? and ?The Margin of Safety.?

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