Last from Gen. Buffett: Clear thinking from a small, well-run headquarters

Most people who can write clearly aren't billionaires. Even so, I suspect that the ease of Warren Buffett's prose is related to his business success, because his simple, informative writing reflects his clear, unfettered thinking.

Buffett writes plainly even when discussing complex financial theories: "Both Charlie and I believe that Black-Scholes [a financial formula for valuing stock options and other derivative financial instruments] produces wildly inappropriate values when applied to long-dated options.… Part of the appeal of Black-Scholes to auditors and regulators is that it produces a precise number. Charlie and I can't supply one of those.… Our inability to pinpoint a number doesn't bother us: We would rather be approximately right than precisely wrong." (p. 21)  (Tom's italics, because I just liked that phrasing so much. And so should all you J-2s out there.) 

He also discusses his criteria for buying companies: "A line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: 'When the phone don't ring, you'll know it's me.'" (p. 28)        

But, you may wonder, isn't the military just too big to be run like Buffett runs Berkshire Hathaway? Consider this: In 2010, the company's revenue was $136.2 billion, and the total payroll of entities in which it is involved numbers more than 260,000. (p. 106) Not as big as the Pentagon overall, but almost in the same league as the military services, and, as I noted last year, actually bigger than the Marine Corps. So consider this final note in the annual report: He thanks "the 20 men and women who work with me at our corporate office (all on one floor, which is the way we intend to keep it!)." (p. 26)

That's not a typo for 20,000. His headquarters consists of twenty people -- down one from last year.