Among the stockholders, the size of the “Buffett premium”—that is, the amount above fair value that Buffett’s presence adds to the stock—is a subject of endless debate. It is feared that his death could be followed by panic selling, though, as Buffett would be quick to point out, his death would not affect the value of Berkshire’s Coca-Cola stock or of any of its other assets. Save for rare occasions, such as his recent annual letter, Buffett does not comment on what he thinks Berkshire is worth. His policy is to disclose what he will about the company and let trading follow its course.
But the obsession with Buffett’s longevity is one that Buffett, though for different reasons, feels more keenly than anyone. He repeats at every turn the quip that he plans to run Berkshire for at least a few years after his death, via séances. (No saying goodbye to Berkshire, even then.)
When Doris, his elder sister, researched the Buffett family tree, Warren said the only thing he wanted to know about his ancestors was how long they had lived.15 Another time, he remarked to a friend that although scientists had not found a correlation between age and wealth, he didn’t think they had ever studied age and superwealth.16 Still again, when a shareholder asked what his goal was, now that he had become the richest man in the country, Buffett spit out, “To become the oldest one.”17 Even in his private life, he married a woman with a singular interest in helping people cope with death.
It is scarcely implausible that Buffett’s fear of death has contributed to his drive to accumulate. Agnostic and hyperrational, he has few other opiates. His one passion has been to collect—not money, precisely, but tangible evidence of himself. He clings to his friends, his house, his old foods and stock lines, and his stocks themselves. Notably, he says he does not enjoy running businesses; he enjoys owning them.18 In the view of his friend Barbara Morrow, the formative trauma of his life was when he was yanked out of Omaha to go to school in Washington—a forced separation. He has been accumulating assets, but hardly ever selling or disengaging from them, ever since. As he commented in a recent letter, “We like to buy. Selling, however, is a different story.”19 In a sense, his whole career has been an act of holding on—of refusing to say goodbye.
One sees him in Omaha, on a spring Sunday morning, the day before Berkshire’s annual meeting. An ersatz trolley car, not too different from the one Buffett rode as a boy, is making the rounds of Omaha’s hotels, picking up his guests. Buffett is at the front of the trolley. He heartily greets his visitors—the widow of a longtime friend from Wharton, a fellow student of Ben Graham’s, the CEO of a company Buffett owns—who step from various stages of his life as from the pages in an album. Buffett, who is dressed casually and is in a jovial mood, guides the trolley to his country club, where he is throwing a brunch for more than one hundred of his closest disciple-friend-admirers.
In the afternoon, the festivities, now open to all shareholders, continue at Borsheim’s. Tables of caviar, raspberry-and-kiwi tarts, cheesecake, and horseradished roast beef are set beside the jewelry and fine china. A string quartet entertains, and tuxedo-clad porters ease among the crowd ferrying velvet-cased diamonds and trays of champagne.
Buffett has been in a back room, playing bridge with some pals. As the party picks up steam, he quietly saunters in and stakes out a position against a rack of diamond earrings. Shareholders screw up their courage and wander over in groups of twos and threes. Buffett gets a charge out of it, not from the aspect of spectacle, exactly, but from the feeling that all of these people are included in his personal show.
Most of the faces at Borsheim’s are familiar to Buffett. He mentions that he knows a relative of 90 percent of Berkshire’s 7,500 shareholders on sight. He greets James Earl, a balding astronomy professor, and proudly recalls that Earl’s parents invested with Buffett in the partnership back in 1957. Indeed, Buffett tracks the destiny of every one of Berkshire’s million-plus shares—a level of familiarity that no other public CEO would dream of or, for that matter, even remotely desire. But Buffett knows them all. Each time a share of Berkshire trades, Buffett makes a mental note of it, as though someone were getting on and off his trolley.
This helps to explain Buffett’s hold on his admirers. As uncanny as his success has been, his sense of fidelity is even rarer. His faithfulness to old friends and old habits illuminates his entire career. Consider, for a moment, the advice of John Train in his best-selling The Money Masters:
Everything has its season, which does not last forever. The world changes its spots, and the investor must change his.20
Few people on Wall Street would disagree, or even give it a second thought. The former disciples of debt, the Kravises and the Perelmans and the rest, have already lost their taste for leverage and in the nineties are selling equity.
Yet Buffett has spent a lifetime wearing essentially the same spots. He has never opted for investment fashions, be it the Go-Go stocks of the sixties, the high leverage of the eighties, or the derivatives of the nineties. He has continued to hunt for the irreducible kernel that his teacher labeled “intrinsic value.”
Much has been made of Buffett’s metamorphosis away from Ben Graham, from “value” stocks to “growth” companies. The Street is fond of such pigeonholes, just as the critic of art is quick to recognize a Blue Period or a cubist phase. But such boundaries are irrelevant to the artist. To Buffett, the growth/value distinction has always been illusory. He sees the growth potential of a business as a component of its value, just as its assets are a component.21 At a price, Coca-Cola’s potential represents good value; at some higher price, it does not.
The point is that Buffett views all investing, and all that he has ever attempted, as “value investing.” Anything else, he wrote a year after the Salomon episode, is unworthy of the name:
What is “investing” if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value—in the hope that it can soon be sold for a still-higher price—should be labeled speculation.…22
The world has largely lost sight of that distinction. The treasurer of Orange County, California, thought nothing of borrowing heavily and then speculating with the funds for public schools, roads, and waterworks on esoteric interest-rate derivatives, as a consequence of which the county recently went into bankruptcy. Indeed, the notion of intrinsic value is itself something of a lost ideal. In a world of shifting benchmarks and changing “spots,” value is not intrinsic but ephemeral; the painting cannot be appreciated until the critic weighs in, and beauty is truly up to the beholder. In Orange County, beauty was whatever the treasurer or Merrill Lynch, his broker, said it was. Neither really knew, and therefore both were willing to speculate. At the other end of the spectrum, this lack of conviction results more commonly in cowardice and mediocrity.
If we have lost the people with Emersonian inner conviction, it is because we have lost the fixed stars that formerly guided them. The modern relativism has reduced us all to being timid specialists, peeping out from cubbyholes marked “growth” and “derivative.” For similar reasons—the lack of intrinsic value systems—educators waffle and juries seem unable to convict. They retreat, as it were, into ambiguity, complexity, and cacophony. Where one conviction is lacking, a thousand opinions will do—indeed, they become a necessary recourse. Our captains seem the smaller for it, not only on Wall Street but in industry, education, government, and public life in general.
Buffett, in contrast, seems the larger for his rare independence. As he expressed it, “I don’t have to work with people I don’t like.”23 There are few people, CEOs and statesmen included, who would say the same.
We see him in his inner sanctum, without advisers or lackeys, opposite the framed and fading newspapers and the looming picture of his father, who counseled him toward just such sweet Emersonian solitude. Hours pass without interruption; the telephone scarcely rings. He is looking not for patterns on a screen but for the fundamental values, the time-honored merch
ants, the shoe companies, the Horatio Alger-Rose Blumkins, the Ben Rosner retailers, the World Books, the salt-of-New Bedford Ken Chaces, the scrupulous Tom Murphys, the universal Coca-Colas. He judges them not according to the “season,” but by the sound principles and aphorisms that his father or grandfather or Ben Graham might have recognized. Buffett has not always lived up to his heroes. He is only human, and he certainly has strayed. But he has at least been able to evoke their memory.
When Buffett is called to his reward, it is likely that his bequest will dwarf the legacies of Carnegie, Ford, Rockefeller, and all that have gone before him.24 The Buffett Foundation will probably find itself with the largest endowment in the country (the Ford Foundation, the biggest, has assets of $7 billion). But the legacy that preoccupies Buffett is not what will happen to his money, but what will happen to Berkshire itself. He harbors a ghoulish fantasy that once he is in the grave, Berkshire will continue to operate as in the past. Indeed, he has taken pains to assure investors that whether he or his wife dies first, “in neither case will taxes and bequests require the sale of consequential amounts of stock.”25
If Buffett and Munger are leveled by the same truck, or if Buffett does not get around to grooming a successor, the company, at least temporarily, will be run by a “third man,” chosen by Buffett. The identity of this Harry Lime has long been secret, even to Buffett’s children.§ But after the GEICO deal, Buffett revealed that GEICO’s Lou Simpson would be called on to pinch hit for Berkshire “if something were to happen to Charlie and me.”26
Beyond that, Berkshire will be in the hands of its board, which Buffett has handpicked. He has recently appointed his wife and son Howie as directors, steps that he hopes will perpetuate the company’s sense of mission. (The other directors are Buffett; Malcolm G. Chace III, the son of the former chairman; Munger; and Omaha businessman Walter Scott, Jr.) His family members will represent the controlling owner, presumably the foundation. “All in all,” Buffett wrote recently, “we’re prepared for ‘the truck.’ ”27
At sixty-five, Buffett is in excellent health, though he seems to have slept through the dietary revolution of the professional classes. It is not uncommon for him to greet the morning with a bowl of peanuts and a Cherry Coke. During a Super Bowl weekend organized by Tom Murphy, Buffett ordered vanilla ice cream and chocolate sauce for breakfast. When his friends started kidding him about his health, he responded stagily: “What I want people to say when they pass my casket is—‘Bov, was he old!’ ”28
Though still absorbed in his work, Buffett has become a tad less intense with his success. His sons say he is more relaxed than in years back; Peter is no longer aware of the clock ticking in his father’s head.
Some of this may be attributable to Astrid, with whom Buffett has grown highly comfortable. Buffett thinks that he has helped her self-esteem,29 and no doubt draws pleasure from a sense of reciprocity. When Buffett and Astrid go out, say, to Gorats, Buffet looks like any Omaha gentleman and his wife, sometimes draping an affectionate arm around her.30 Astrid has a sense of humor about her role and has told one of Buffett’s relatives that living with Warren is “the best job” she has had. Joe Rosenfield, Buffett’s octogenarian friend, says, “Astrid is what he needs now. He can go off and leave her and she doesn’t mind. She’s a free spirit—a girl of quality.”
For all that, Warren is deeply attached to Susie, with whom he reunites in one corner or another (such as in Paris for a board meeting of Coca-Cola) every month or so. Warren also has a sense of humor about the arrangement; he told a friend that he couldn’t divorce Susie because she is too rich.31
Recently, Buffett has somewhat loosened his purse strings. He spent $1.25 million of his own money for a 25 percent interest in Omaha’s minor league baseball team—effectively an act of charity to keep the team in town.32 In 1993, on the occasion of Mrs. B’s hundredth birthday, Buffett eschewed his usual gift of flowers and See’s candy and presented a check for $1 million to the Rose Blumkin Performing Arts Center, an abandoned vaudeville house Mrs. B was converting into a children’s theater. He also spends a bit more personally, such as on his travel and on his pricey suits, though the latter seem to develop rumples even in his closet. But in relative terms, his spending (as well as his philanthropy) remains a flyspeck.‖
His life is his work; food and shelter are minor matters. Buffett still drives his own car, a blue Lincoln Town Car. He has no fancy automobiles or homes, and he would not be interested in them if he had. On a recent two-week stay at his ocean-view home in Laguna Beach, he went out of the house but three times—twice to a movie and once to have lunch (his daughter counted). He still plays bridge, but usually via a computer (which he refuses to use for work) many miles away from his partners.33
In Omaha, Buffett has become a curiosity. People drive by Farnam Street very slowly, sometimes slowing to a stop, gaping with wonderment at the incongruously modest house by the blinking light. Buffett can see them from his kitchen, where he might be scooping out some ice cream, or grabbing a Cherry Coke to take to his “pit,” to settle in with papers and annual reports. He and Astrid are alone in the house. Buffett has no flunkies or hangers-on, and the two of them have no butlers or household staff—only a maid who comes every other week.34 Astrid still prowls the stores for bargains, and loads up her station wagon with Cherry Coke when she finds it on sale.
Buffett does enjoy being a billionaire, but in offbeat ways. As he put it, though money cannot change your health or how many people love you, it lets you be in “more interesting environments.”35 Buffett mixes with a rarified crowd of CEOs, politicians, and others. Gary Kasparov, the world chess champion, who has an interest in developing capitalism in Russia, has called on Buffett in Omaha. The end of summer 1994 found Buffett on Martha’s Vineyard, golfing with Bill Clinton, after which he and the President had a quiet dinner at Kay Graham’s. Most notably, Buffett has developed an intriguing friendship with Bill Gates, his junior by twenty-six years and his financial rival. Though Gates is a technology freak and Buffett is anything but, they plainly have fun together. Both are fiercely competitive, genuinely curious, unusually boyish as CEOs go, and insanely rich. Having broken the ice at a Nebraska football game, in 1995 the two traveled together, and with their wives, to China.
And Buffett finds a receptive audience when he wants to distill the Zen of Warren Buffett. He goes around quite often now, at college campuses, at his companies, even in smaller, informal groups, launching into his liturgy, retelling his stories, serenading as many onto his trolley as he can.
Much about this life is strange, and much about Buffett remains obscure. Perhaps, as a judge in Buffalo once remarked of his purported monopolist aims, the private man may be secreted “in the unfathomable human mind.”
But the public legacy is secure. Buffett’s uncommon urge to chronicle made him a unique character in American life, not only a great capitalist but the Great Explainer of American capitalism. He taught a generation how to think about business, and he showed that securities were not just tokens like the Monopoly flatiron, and that investing need not be a game of chance. It was also a logical, commonsensical enterprise, like the tangible businesses beneath. He stripped Wall Street of its mystery and rejoined it to Main Street—a mythical or disappearing place, perhaps, but one that is comprehensible to the ordinary American.
As opposed to the dark side of Wall Street, to which the public was so accustomed, Buffett’s was a face not often seen. He was one of the few capitalists who got fabulously rich without leaving a trail of those he had victimized. (His adversaries in Buffalo were a singular exception). In Munger’s phrase, he strove to be more than a “miserable accumulator,” in particular by treating investors and investees as partners, with no fingers crossed and no “exit strategies.”
And it is here that Buffett begins to transcend finance and to claim a space on a broader canvas. His comment that his favorite holding period was “forever” was a stunning breach of the usual horizon both on
Wall Street and off it. “Forever” has an embarrassing ring to postmodern ears; the word seems to belong to dime novels and fairy tales.
Buffett made that pledge to his candy business, his newspaper, to Tom Murphy and Kay Graham and many more. In an age of fraying loyalties, he turned investments into relationships, almost into a form of social contract. As he wrote to his partners in 1969, with regard to Berkshire Hathaway:
I certainly have no desire to sell a good controlled business run by people I like and admire, merely to obtain a fancy price.36
Such a sentiment was unheard-of on Wall Street and blasphemous in academia, but rare on Main Street as well.
It is more stunning today because it is more rare; it deviates not only from the fickleness of mutual funds, but from all in society that is transient. Today, the frenetic trading at Wall and Broad may be seen as a metaphor for the rapidity with which once-firm social connections, to job, neighborhood, family, civic affiliation, and the past itself, become unglued. And unglued each day all the faster. When Andy Warhol predicted fifteen minutes of fame for each of us, he did not get the half of it. In these restless times, it is not only our fame that disappears in a quarter of an hour, but, seemingly, every relationship that once was enduring or valued for its ongoing character. Professional partnerships splinter apart, athletic heroes desert their teams, employers overhire and then overfire, and even our universities, the supposed repositories of our past, race to reinvent the canons that had served for a near-millennium. In our daily walks of life, the faces on the trolley change overnight. Investors seek their exit strategies, but they are hardly alone. Viewed in this light, Wall Street’s mania for shuffling paper is only the most blatant sign of the general rush to put a price on once-lasting commitments. This is why Buffett filled a hollow. More than most, he reclaimed the rewards that spring not from trading commitments one for the next, but from preserving them.
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