Warren Buffett Warns To Be Wary Of Salesmen Promising Riches: ‘Those Who Cannot Fill Your Pocket Will Confidently Fill Your Ear’

Warren Buffett’s line, “Those who cannot fill your pocket will confidently fill your ear,” captures a central theme of Berkshire Hathaway’s (BRK.B) (BRK.A) 1983 shareholder letter: high-energy market chatter often serves intermediaries more than owners. He used the remark to explain why Berkshire avoids policies that encourage rapid trading in its shares and instead seeks a shareholder base focused on underlying business value rather than market theatrics.

In that same section of the letter to Berkshire investors, Buffett outlined how turnover and the pursuit of “liquidity” can become goals in themselves, even as they do little to improve a company’s earning power.

The immediate context was a detailed discussion of what Buffett called the “irony” of celebrating market activity. He argued that frequent buying and selling impose costs — commissions, spreads, and other “transfer frictions” — that reduce the amount owners ultimately keep, all without changing the economics of the enterprise.

To make the point concrete, the letter ran through some simple arithmetic showing how elevated turnover effectively siphons a material share of profits away from shareholders. The broader message is that hyperactivity in the secondary market can feel productive, even as it effectively functions as a self-imposed tax on long-term returns.

Of course, as the legendary investor behind Berkshire Hathaway’s climb to trillion-dollar status, Buffett’s credibility on the subject rests on much more than rhetoric. The 1983 shareholder letter set out a preference for attracting long-term “owner” investors and avoiding measures — such as stock splits — that might draw in short-term traders. The intent, Buffett wrote, was to keep Berkshire’s share price tethered to intrinsic value and to reduce the incentive for policies aimed at pleasing transient market participants. That philosophy helped define Berkshire’s communications for decades, and remains a reference point for boards considering how their own shareholder bases might shape corporate decision-making.

The remark also aligns with Berkshire’s operating posture. Earlier in the same report, Buffett emphasized conservatism in financing and a focus on per-share value creation – themes that are easier to sustain when a company’s investor base is not pressuring management for short-term “action.” By appealing directly to investors who evaluate long-run cash generation over quote-by-quote movements, Berkshire sought to limit distractions that could skew capital allocation. The connection is straightforward: the more attention diverted to managing the stock, the less room remains to manage the business.