“Abraham Lincoln once posed the question: ‘If you call a dog’s tail a leg, how many legs does it have?’ and then answered his own query: ‘Four, because calling a tail a leg doesn’t make it one,'” Buffett writes.
Our broker friend Jigneshbhai was reading from Warren Buffett’s latest annual letter to his shareholders. He continued as he read further.
“Buffett then sarcastically adds: “Abe would have felt lonely on Wall Street.””
The lazy skeptic in our broker friend seemed to have loved this. I saw that he had a wide grin on his face as he looked up at us after reading this.
Swami and I were just digesting this leg-tail business when our broker friend continued.
“Not just on Wall Street, Lincoln would have felt lonely at so many places, with so many bent on calling a tail a leg, isn’t it?” Jigneshbhai asked, with, maybe, a slight sense of resignation.
“No wonder Lincoln is said to be one of their greatest Presidents. While everyone saw their version of reality, he saw reality as it was,” our broker continued, still excited about what he had read.
Swami and I were wondering which tails and legs and their ‘mis-calling’ was our broker friend referring to.
Swami was the first to ask, as usual.
“Buffett is probably referring to the accounting shenanigans that so many companies indulge in – when they don’t call some expenses as expenses. I read his latest letter” he remarked proudly.
Jigneshbhai was pleasantly surprised with Swami’s comment.
“Indeed. Reality doesn’t change when you call it something else” he said, and then after a few moments of silence, added, “All that you manage is an illusion.”
Swami looked at me and wondered if our broker friend was talking about expenses or something else.
Swami was definitely thinking about only accounting. “You need to be careful about such companies and such managements. The ones who regularly indulge in calling a tail a leg. Expenses need to be represented correctly to shareholders,” he proclaimed confidently.
He was probably right about being careful of managements that do such misrepresentation. But Jigneshbhai was probably talking about misrepresentations of reality by some other entities.
“If you don’t see and accept reality as it is, and keep calling it something else, reality itself doesn’t change, isn’t it?” he continued again.
“And that’s true of not just companies and managements, but also of people, political parties and even countries, of late, isn’t it? If you repeatedly call a tail, a leg, it doesn’t become a leg.”
“It is better to maintain some distance from them – because anyone who repeatedly calls a tail a leg will hardly change that habit. And actually start believing it.”
“After a while, even you can forget that what you call a leg is actually a tail.”
Jigneshbhai stopped and looked at us with a sigh. Swami and I started thinking about what our broker friend had just said – perhaps Lincoln’s statement applied not just to accounting, we thought.
But Swami was still not sure what to do and how to deal with those who call a tail a leg, repeatedly (though our broker friend had advised a safe distance!)
Just as we were thinking about it, the wealthy man in the sprawling bungalow, who had been listening to our conversation, came across to our table. Jigneshbhai smiled at him as he saw him coming.
And as we finished our coffee, the wealthy man looked at Swami and said “कुत्ते की दुम टेढ़ी की टेढ़ी – कभी सीधी नहीं होती. You must deal with them assuming this!”