SECTION – 3 (Part – 1)
Directions
for questions 78 to 80: Read the passage carefully
and answer the questions given at the end of each passage.
Number of
words in this passage: 955
Passage - 4
In the annals of investing, Warren
Buffett stands alone. Starting from scratch, simply by picking stocks and
companies for investment, Buffett amassed one of the epochal fortunes of the
twentieth century. Over a period of four decades more than enough to iron out
the effects of fortuitous rolls of the dice, Buffett out performed the stock
market, by a stunning margin and without taking undue risks or suffering a
single losing year. Buffett did this in markets bullish and bearish and through
economies fat and lean, from the Eisenhower years to Bill Clinton, from the
1950s to the 1990s from saddle shoes and Vietnam to junk bonds and the
information age. Over the broad sweep of postwar America, as the major stock
averages advances by 11 percent or so a year, Buffett racked up a compounded
annual gain of 29.2 percent. The
uniqueness of this achievement is more significant in that it was the fruit of
old fashioned long-term investing. Wall Street's modern financiers got rich by
exploiting their control of the public's money: their essential trick was to take
in and sell out the public at opportune moments. Buffett shunned this game, as
well as the more venal excesses for which Wall Street is deservedly famous. In
effect, he rediscovered the art of pure capitalism, a cold-blooded sport, but a
fair one. Buffett began his carer, working out of his study, in Omaha in 1956. His grasp
of simple verities gave rise to a drama that would recur throughout his life.
Long before those pilgrimages to Omaha,
long before Buffett had a record, he would stand in a corner at college
parties, baby-faced and bright-eyed holding forth on the universe as a dozen or
two of his older, drunken fraternity brothers crowded around. A few years
later, when these friends had metamorphosed into young associates starting out
on Wall Street, the ritual was the same. Buffett, the youngest of the group,
would plop himself in a big, broad club chair and expound on finance while the
others sat at his feet. On Wall Street, his homespun manner made him a cult
figure. Where finance was so forbiddingly complex, Buffett could explain it
like a general-store clerk discussing the weather. He never forgot that
underneath each stock and bond, no matter how arcane, there lay a tangible,
ordinary business. Beneath the jargon of Wall Street, he seemed to unearth a
street from small-town America.
In such a complex age, what was stunning about Buffet was his applicability.
Most of what Buffett did was imitable by the average person (this is why the
multitudes flocked to Omaha).
It is curious irony that as more Americans acquired an interest in investing,
Wall Street became more complex and more forbidding than ever. Buffett was born
in the midst of depression. The depression cast a long shadow on Americans, but
the post war prosperity eclipsed it. Unlike the modern portfolio manager, whose
mind-set is that of a trader, Buffett risked his capital on the long term
growth of a few select businesses. In this he resembled the magnates of a
previous age, such as J P Morgan Sr.
As Jack Newfield wrote of Robert
Kennedy, Buffett was not a hero, only a hope; not a myth, only a man. Despite
his broad wit, he was strangely stunted. When he went to Paris;
his only reaction was that he had no interest in sight-seeing and that the food
was better in Omaha.
His talent sprang from his unrivalled independence of mind and ability to focus
on his work and shut out the world, yet those same qualities exacted a toll.
Once, when Buffett was visiting the publisher Katharine Graham on Martha's Vineyard, a friend remarked on the beauty of the
sunset. Buffett replied that he hadn't focused on it, as though it were
necessary for him to exert a deliberate act of concentration to
"focus" on a sunset. Even at his California, beachfront vacation home,
Buffett would work every day for weeks and not go near the water. Like other
prodigies, he paid a price. Having been raised in a home with more than its
share of demons, he lived within an emotional fortress. The few people who
shared his office had no knowledge of the inner man, even after decades. Even
his children could scarcely recall a time when he broke through his surface
calm and showed some feeling. Though part of him is a showman or preacher, he
is essentially a private person. Peter Lynch, the mutual-fund wizard, visited
Buffett in the 1980s and was struck by the tranquillity in his inner sanctum.
His archives, neatly alphabetized in metal filing cabinets, looked as files had
in another era. He had no armies of traders, no rows of electronic screens, as
Lynch did. Buffett had no price charts, no computer-only a newspaper clipping
from 1929 and an antique ticker under a glass dome. The two of them paced the
floor, recounting their storied histories, what they had bought, what they had
sold. Where Lynch had kicked out his losers every few weeks, Buffett had owned
mostly the same few stocks for years and years. Lynch felt a pang, as though he
had travelled back in time. Buffett's one concession to modernity is a private
jet. Otherwise, he derives little pleasure from spending his fabulous wealth.
He has no art collection or snazzy car, and he has never lost his taste for
hamburgers. He lives in a commonplace house on a tree-lined block, on the same
street where he works. His consuming passion – and pleasure – is his work, or,
as he calls it, his canvas. It is there that he revealed the secrets of his
trade, and left a self-portrait.
78. "Saddle shoes and Vietnam".
as expressed in the passage, refers to:
I. Dernier cri
and Vietnam war.
II. Growth of
leather footwear industry and Vietnam
shoe controversy.
III. Modern U.S. population
and traditional expatriates.
IV. Industrial
revolution and Vietnam Olympics.
V. Fashion and
politics.
A. I
& V B. II
& IV C. III & V D. II & III
Explanatory Note:
The contrast in the
passage (refer to lines 5 to 7 of para 1) is between extravagance and
austerity. From ‘saddle shoes and Vietnam’
refers to the latest trend in fashion (Dernier cri) and Vietnam war, in
other words Fashion and Politics. Choice
(A)
79. Identify the correct
sequence:
I. Depression
-> Eisenhower -> Microsoft
II. California -> New York
-> Omaha
III. J .P Morgan
-> Buffett -> Bill Gates
IV. Mutual funds
-> Hedge funds -> brokers
A. I
& II B. I & III C. II
& IV D. III & IV
Explanatory Note:
It is
stated, towards the end of para 1, that Warren Buffet was born during the
Depression. It is mentioned at the end of para 1 that the Eisenhower years were
during the 1950s and Microsoft gained fame during the 1990s. Hence choice (1)
has the correct sequence. In the last sentence of para 1 ‘it is stated that
J.P. Morgan was senior to Warren Buffet and Bill Gates the founder of Microsoft
became famous in the 1990s. Hence the correct sequence is J.P. Morgan ®
Buffett ® Bill Gates.
Hence option B is correct Choice (B)
80. Choose the most
appropriate answer: according to the author, Warren Buffett was
I. Simple and
outmoded.
II. Against
planned economy and technology.
III. Deadpan.
IV. Spiritually
raw.
A. I
& IV B. II & IV C. III
& IV D. I & III
Explanatory Note:
It is implied in the
middle of para 2 that Warren Buffet was devoid of emotion, he was seldom
excited by material objects, hence the word deadpan fits him aptly. It is
stated in para 2 that Buffett lived within an emotional fortress i.e. he was
not a very spirited person, this points to the fact that he was spiritually
raw. Hence III and IV are apt. Choice
(C)