University of South Florida Scholar Commons Graduate Theses and Dissertations Graduate School September 2020 The Warren Buffett Project: A Qualitative Study on Warren Buffett Christian G. Koch University of South Florida Follow this and additional works at: https://scholarcommons.usf.edu/etd Part of the Finance and Financial Management Commons Scholar Commons Citation Koch, Christian G., "The Warren Buffett Project: A Qualitative Study on Warren Buffett" (2020). Graduate Theses and Dissertations. https://scholarcommons.usf.edu/etd/8457 This Dissertation is brought to you for free and open access by the Graduate School at Scholar Commons. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Scholar Commons. For more information, please contact [email protected]. The Warren Buffett Project: A Qualitative Study on Warren Buffett by Christian G. Koch A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Business Administration Muma College of Business University of South Florida Co-Major Professor: T. Grandon Gill, D.B.A. Co-Major Professor: Robyn Lord, D.B.A. Priya Dozier, D.B.A. Dejun Kong, Ph.D. Tianxia Yan, Ph.D. Date of Approval: May 8, 2020 Keywords: Finance, Financial Literacy, Value Investing, business school education, Berkshire Hawthaway meetings, thematic analysis Copyright © 2020, Christian G. Koch DEDICATION I want to dedicate this work to my family. ACKNOWLEDGMENTS I want to thank my wife, Anne Koch. She single-handedly ran our household of five children while allowing me to dream big and achieve my high school goal of becoming a professor. I also want to thank my five children individually: Carolyn Koch, Lily Koch, Molly Koch, Colin Koch and Christian Jr. (Chip) Koch; thank you for being patient and understanding. The Koch household in Atlanta, GA, was a unique environment to have grown up in. Furthermore, I want to thank my parents, Don and Christina Koch, from St. Louis MO, for their guidance and support. Finally, I want to thank Dr. Grandon Gill for establishing the right vision of Engaged Scholarship. Currently, many DBA programs (unlike the University of South Florida program) fail to achieve greatness for professional doctorates because of their poor structures and philosophical underpinnings. However, Dr. Gill has “the right stuff” and truly understands the DBA field. TABLE OF CONTENTS List of Tables ................................................................................................................................. iii List of Figures ................................................................................................................................ iv Abstract ............................................................................................................................................v Chapter One: Warren Buffet: Challenging Conventional Wisdom on Academic Finance .............1 Abstract ................................................................................................................................1 Introduction ..........................................................................................................................2 Methodology ........................................................................................................................6 Findings................................................................................................................................8 Efficient Market Theory ......................................................................................................9 Volatility as a Measure of Risk ..........................................................................................13 Growth Stocks vs Value Stocks .........................................................................................17 How to Think About Investing ..........................................................................................20 Stocks vs Bonds with the Absence of Diversification .......................................................25 Practical Application of Finance Terms ............................................................................26 Limitations of Qualitative Data Analysis ..........................................................................29 Future Research .................................................................................................................29 Conclusion .........................................................................................................................30 References ..........................................................................................................................32 Appendix 1.1: Academic Finance Theoretical Basis .........................................................35 Chapter Two: A Qualitative Study on Warren Buffet: Enhancing Financial Literacy Knowledge ...............................................................................................................................36 Abstract ..............................................................................................................................36 Introduction ........................................................................................................................36 Methodology ......................................................................................................................39 Findings..............................................................................................................................41 Critical Finding #1 .................................................................................................42 Critical Finding #2 .................................................................................................43 Critical Finding #3 .................................................................................................45 Critical Finding #4 .................................................................................................49 Critical Finding #5 .................................................................................................50 Critical Finding #6 .................................................................................................55 Critical Finding #7 .................................................................................................56 Critical Finding #8 .................................................................................................59 Limitations of Qualitative Data Analysis ..........................................................................60 Future Research .................................................................................................................61 i Conclusion .........................................................................................................................61 References ..........................................................................................................................63 Chapter Three: Published Articles .................................................................................................66 Appendix A: Can Insider Trading Information be a Useful Tool for Investment Managers? .......67 Appendix B: Warren Buffett Faces Insider Trading: A Case Study ..............................................74 ii LIST OF TABLES Table 1.1: Selected Findings-Efficient Market Theory .................................................................13 Table 1.2: Selected Findings-Beta and Volatility as a Measure of Risk .......................................17 Table 1.3: Selected Findings-Growth Stocks vs Value Stocks .....................................................20 Table 1.4: Selected Findings-How to Think About Investing ......................................................25 Table 1.5: Selected Findings-Asset Allocation .............................................................................27 Table 1.6: Selected Findings-Practical Application of Finance Terms .........................................30 Table 2.1: Selected Findings-Hold Cash Because Unusual and Strange Things Happen in Markets ....................................................................................................................43 Table 2.2: Selected Findings-Compound Interest .........................................................................45 Table 2.3: Selected Findings-Inflation ..........................................................................................46 Table 2.4: Selected Findings-Stocks are Businesses.....................................................................51 Table 2.5: Selected Findings-Self-Discipline and Waiting for the Fat Pitch ................................56 Table 2.6: Selected Findings-Emotional Stability ........................................................................57 Table 2.7: Selected Findings-Electronic Herd ..............................................................................60 iii LIST OF FIGURES Figure 2.1: Stock Market Capitalization to GDP for the US from the St. Louis Federal Reserve .........................................................................................................................50 iv ABSTRACT Engaged scholarship focuses on real-world problems. The purpose of my research is to understand why Warren Buffett and his investment principles are not taught systematically in institutions where people