Moneybeat: The Buffett principle

MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and adviser David Bahnsen. David heads up the wealth management firm The Bahnsen Group. He is here now. Good morning to you, David.

DAVID BAHNSEN: Good morning, Nick, Good to be with you.

EICHER: David, I want to discuss your Dividend Café this week pegged to the retirement news about Warren Buffett. There’s a lot to be gained from studying Buffett and I want to leave time for that. So let’s begin with a lightning round on economic news from the past week.

And let’s open with the 90-day trade war pause between the U-S and China … we talked last week about the de-escalation and you wanted to look more deeply into the details … so what can you say this week … having read more and talked with people?

BAHNSEN: Well, what's interesting is that the announcement that came from Secretary Bessent from Switzerland right after we spoke last week on Monday morning didn't give a lot of detail. But it gave all the information I think that markets needed—which is, we're in a significant de-escalatory phase.

The president said, “Hey, I might lower 145% tariffs to 80%.” Then he ended up getting rid of them altogether—or keeping what was already on, the 10% tariff both countries have on each other, and then this 20% fentanyl deal. But other than that, he got rid of all of the tariff escalation he had done since April 2.

I do think that there's a lot of wood to chop as far as the various details that go outside of the tariff rate. What are they going to do to commit to certain new markets being opened? What are they going to do in terms of protecting intellectual property? Currency was not in any of the comments that Bessent made last week, so there's a lot to still be worked out.

But what is very clear to me is anybody who is hoping that on the other side of this we would be trading with China less, I think is going to be very disappointed. They may very well get a good deal and some improvement in terms. I think that that's a great thing to hope for.

But when all said and done, it looks like where they're headed is trying to increase bilateral trade, and that's a very different place than what the administration was talking about a month, month-and-a-half ago.

EICHER: So there was a big international trip with President Trump—lots of talk about deals and, anything you want to say about any of that?

BAHNSEN: In a lot of ways, it was a successful trip for the president—at least politically.

I am continually surprised, because some of the things announced I tend to be a fan of, and yet, I’m always a little surprised that some of the base for the president is a fan of.

You know, a lot of the economic nationalism and right-wing populism behind the popularity of President Trump, they don’t go with big international deals. (You’re going to do this for us, we’re going to do this for you. Expanding markets in Middle Eastern countries, let alone other countries like China we were talking about.) Yet, that’s the type of stuff the president’s doing. He does like deals, and he especially likes to announce deals. He announced quite a few things last week.

Of course, it’s very early to say where we’re headed on Russia / Ukraine—that seems to have hit another snag. The possibility of a deal with Iran that’s going to look a lot like the Obama administration’s deal with Iran, but maybe with more inspector accountability. That’s very interesting, and it could help the president’s goal of lower oil prices, although it’s certainly not going to make oil producers in Oklahoma and Texas happy.

So all that to say some of these things are going to be beneficial for the president, but they’re not necessarily going to be beneficial to some of the people who support the president.

EICHER: Finally, let’s step back from the swirl of markets and geopolitics to something deeper: namely, a reflection on calling, compounding, and what creates value over time.

David, you devoted your entire Dividend Café to an understanding of the famed investor Warren Buffett. Of course, it’s not new news that Buffett announced he’s stepping down as CEO of Berkshire Hathaway—but I do think there are going to be in the months remaining before he actually steps away at the end of the year … numerous attempts to derive lessons. And I really appreciate yours—because you wrote not merely about Buffett’s wealth, but to what’s behind it—not just decades of disciplined investing, but something more profoundly human.

I’ll quote here from your piece: “Economics is the study of human action around the allocation of scarce resources, and human beings were created by God with tremendous capacity to do great things … [and in those things] there is a collective of inspiration, wisdom, resources, experience, and capability in human beings that can change our lives and careers.”

So when Buffett’s story is rightly told, it’s not only about financial capital—but also social and spiritual capital: networks, trust, mentorship, shared ideas. Or as you put it: “Information and analysis compound at one rate, but relationships and social capital compound at an even greater rate.”

Would you unpack that for us?

BAHNSEN: Yes, and I provided this caveat: so many things in Warren Buffett’s worldview are hostile to the Christian worldview. My point is that, believer or not, when you study Warren Buffett, you could focus on the incredible skill he had at securities analysis, his work ethic early on in his life, the ability to save and invest. Those are valuable lessons.

But what you also see is throughout decades upon decades of compounding, not merely of the money he accumulated, but of the relationships, connections, networks. This was a person in Omaha, Neb., developing thick networks in financial capitals like New York, technology epicenters like Silicon Valley, energy-producing parts of the country.

Again, whether it’s in the domain of politics or media or finance or technology, he surrounded himself with people and learned from them and had deep conversations.

There’s something to this idea of thick networks where it’s not just transactional. He’s not saying, “I want to befriend this person so that I can go do a business deal with him.” He’s befriending and learning from people with absolutely no agenda whatsoever. Then 17 years later, an opportunity organically presents itself, because that’s the way the world works—this organic, spontaneous reality. We do well to invest in relationships. We do well to learn from others, to contribute to others, not just to have people around us that teach us, but to be around others, teaching them, being a resource to them.

These things feed on themselves, and I think most of us know it. We can observe it, but Buffett just happens to be a person who any study of his life and career reveals he demonstrates it in spades.

I think it’s an important lesson for all of us within the Christian worldview to appreciate that it’s part of God’s created design, that this human social interaction is at the very heart of markets. Today they want to teach young people that markets are all math and science and computer inputs. Well, Warren Buffett says otherwise.

EICHER: And I think you do too, coming on each week, sharing your wealth with our listening audience. So I appreciate that. David Bahnsen is founder, managing partner, and chief investment officer at The Bahnsen Group. Do not miss his Dividend Café this week, all about Warren Buffett. David writes regularly for WORLD Opinions, and as I say, dividend-cafe.com. David, thank you so much. We’ll see you next week.

BAHNSEN: Thanks so much, Nick.

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