CharlieI was one of the few people who at the business school that went down to Wall Street in 1950 when we graduated. And I started dealing with clients, etc. And the more I dealt with various people I started to hear about Warren. And Bill Ruane, who was in the class before me, was a very good friend. And Rick Kenefick, his partner, was in my class and a good friend of mine. So, we had lunch one day and it was probably early in the '60s, early. And he said to me, "You know, you buy the same stocks as a friend of mine, Warren Buffett, who I met at Columbia. You got to meet him." So, Bill arranged a lunch with Warren and that was my first exposure. And then coincidentally, I would guess within the month or maybe a couple weeks after that, a client of mine up in Westport, who was I think dealing with Warren on
Questionerwho was I think dealing with Warren on the sale ofthe sale ofthe sale of Warren's company at the time or it wasWarren's company at the time or it wasWarren's company at the time or it was not his company, it was Dempster,not his company, it was Dempster,not his company, it was Dempster, actually, I think.actually, I think.actually, I think.
OtherSaid to me, "This guy is coming up andSaid to me, "This guy is coming up andSaid to me, "This guy is coming up and he's the brightest guy we've methe's the brightest guy we've methe's the brightest guy we've met and uhand uhand uh let's play go let's all play golflet's play go let's all play golflet's play go let's all play golf together." So, I went up mytogether." So, I went up mytogether." So, I went up my I played golf up in Westport withI played golf up in Westport withI played golf up in Westport with Warren.Warren.Warren.
OtherSo, from then on it was a completeSo, from then on it was a completeSo, from then on it was a complete romance.But, you know, he's a very competitiveBut, you know, he's a very competitiveBut, you know, he's a very competitive guy.guy.guy. And Warren and I used to play golfAnd Warren and I used to play golfAnd Warren and I used to play golf in a twosome or a foursome.in a twosome or a foursome.in a twosome or a foursome. And we would alwaysif we hit the ball straight out,if we hit the ball straight out,if we hit the ball straight out, I would guess that we were within 4 ftI would guess that we were within 4 ftI would guess that we were within 4 ft of each other when the ball landed.of each other when the ball landed.of each other when the ball landed. But, uhBut, uhBut, uh he was a heck of a competitor and Ihe was a heck of a competitor and Ihe was a heck of a competitor and I would say,would say,would say, you know, Warren didn'tyou know, Warren didn'tyou know, Warren didn't overdo golf and uhoverdo golf and uhoverdo golf and uh so, I'm sure he could have gotten itso, I'm sure he could have gotten itso, I'm sure he could have gotten it well into the '70s, but hewell into the '70s, but hewell into the '70s, but he he was probably around at 90 or so.he was probably around at 90 or so.he was probably around at 90 or so. That's where I was.I mean, one of the reasons that we wereI mean, one of the reasons that we wereI mean, one of the reasons that we were we became very close friends at the timewe became very close friends at the time
Charliewe became very close friends at the time was that Susie met my wife.was that Susie met my wife.was that Susie met my wife. And she loved my wife and my wife sheAnd she loved my wife and my wife sheAnd she loved my wife and my wife she was a very lovable person.was a very lovable person.was a very lovable person. And so,And so,And so, there's no doubt about the fact that Ithere's no doubt about the fact that Ithere's no doubt about the fact that I mean, Warren told me the same story onlymean, Warren told me the same story onlymean, Warren told me the same story only he told it to me 50 years ago. Maybehe told it to me 50 years ago. Maybehe told it to me 50 years ago. Maybe more than 50 years ago.more than 50 years ago.more than 50 years ago. UhUhUh he was very indebted to Susie and uhhe was very indebted to Susie and uhhe was very indebted to Susie and uh he loved her deeply.Everybody's got a certain amount ofEverybody's got a certain amount ofEverybody's got a certain amount of personality and charm in that family. Ipersonality and charm in that family. Ipersonality and charm in that family. I mean, Howie is terrific and Susie'smean, Howie is terrific and Susie'smean, Howie is terrific and Susie's great.great.great. And uhI'm not so sure it wasn't in the genesI'm not so sure it wasn't in the genesI'm not so sure it wasn't in the genes to begin with.to begin with.to begin with. I didn't know his father, but uhI didn't know his father, but uhI didn't know his father, but uh he had enormous love and respect for hishe had enormous love and respect for hishe had enormous love and respect for his father and his father must have been afather and his father must have been afather and his father must have been a very charismatic guy because he was invery charismatic guy because he was invery charismatic guy because he was in Washington,Washington,Washington, you know, as a representative foryou know, as a representative foryou know, as a representative for a number of terms.I missed it at first,I missed it at first,I missed it at first, but it came through very strongly.but it came through very strongly.but it came through very strongly. And uhI think he wasI think he wasI think he was very afraid of his mother.very afraid of his mother.very afraid of his mother. She lived up the street andShe lived up the street andShe lived up the street and I think I only met her once and I used
CharlieI think I only met her once and I used to go out to Omaha and I wondered, you know, I when I first went out there I stayed at Warren's house cuz he was very hospitable then and he didn't know many guys down on Wall Street. But, he never talked to her about her. And uh I learned not to ask any questions. I would think it started around Well, it started right after I uh I met Warren, actually. But, it wasn't every Sunday night then, it was just occasional. But, uh I was very much into stocks in those days and I was doing a lot of research and I was doing research on very undervalued stocks. In those days, you know, Warren was doing the same thing only more so and there were many decent opportunities at three, four, five, six times earnings and half book value and you know, every Sunday night, after I worked like hell during the week, I would call Warren with all my
Questionerweek, I would call Warren with all my best ideas.best ideas.best ideas. Warren would sit upstairs in his I thinkWarren would sit upstairs in his I thinkWarren would sit upstairs in his I think on the landing where he had his chairon the landing where he had his chairon the landing where he had his chair and or a little office there.and or a little office there.and or a little office there. And uhI would bring up the name of a companyI would bring up the name of a companyI would bring up the name of a company and most of the time he knew much moreand most of the time he knew much moreand most of the time he knew much more than I did about the company. He'd knowthan I did about the company. He'd knowthan I did about the company. He'd know how many shares were outstanding, he'dhow many shares were outstanding, he'dhow many shares were outstanding, he'd know the capitalization, he'd know theknow the capitalization, he'd know theknow the capitalization, he'd know the earnings. It was absolutely incredible.earnings. It was absolutely incredible.earnings. It was absolutely incredible. But,But,But, uhuhuh every idea I had, I batted up to Warrenevery idea I had, I batted up to Warrenevery idea I had, I batted up to Warren and uhand uhand uh it was like getting the Goodit was like getting the Goodit was like getting the Good Housekeeping Seal of Approval,Housekeeping Seal of Approval,Housekeeping Seal of Approval, particularly if he was going to buyparticularly if he was going to buyparticularly if he was going to buy some.some.some. AndAndAnd I don't know about Warren, butI don't know about Warren, butI don't know about Warren, but when we were finished at maybe 11:00 orwhen we were finished at maybe 11:00 orwhen we were finished at maybe 11:00 or 12:00,12:00,12:00, I was so stirred up,I was so stirred up,I was so stirred up, which I think iswhich I think iswhich I think is something that Warren is capable ofsomething that Warren is capable ofsomething that Warren is capable of doing. I was so stirred up and sodoing. I was so stirred up and sodoing. I was so stirred up and so excited,excited,excited, I didn't go to sleep for a couple ofI didn't go to sleep for a couple ofI didn't go to sleep for a couple of hours.I thought Warren was a terrificI thought Warren was a terrificI thought Warren was a terrific salesman. I mean, when Warren saidsalesman. I mean, when Warren said
Questionersalesman. I mean, when Warren said something it meant a heck of a lot. And something it meant a heck of a lot. And something it meant a heck of a lot. And I think all of us I think all of us I think all of us paid a lot of attention to Warren when paid a lot of attention to Warren when paid a lot of attention to Warren when he he he took a definite stand on something. took a definite stand on something. took a definite stand on something. And uh And uh And uh you know, right from the start, Warren you know, right from the start, Warren you know, right from the start, Warren knew where he was going. I mean, he knew where he was going. I mean, he knew where he was going. I mean, he wanted wanted wanted to have an outstanding reputation. He to have an outstanding reputation. He to have an outstanding reputation. He wanted to have an an a reputation that wanted to have an an a reputation that wanted to have an an a reputation that he never really upset the apple car the never really upset the apple car the never really upset the apple cart when he bought a business, that he kept when he bought a business, that he kept when he bought a business, that he kept the management in place, that he he the management in place, that he he the management in place, that he he never sold one of the things he acquired never sold one of the things he acquired never sold one of the things he acquired even though it was a mistake. even though it was a mistake. even though it was a mistake. And so, he was establishing a reputation he was establishing a reputation he was establishing a reputation that that that paid off later in life. And look at the paid off later in life. And look at the paid off later in life. And look at the reputation he has today. But, that's reputation he has today. But, that's reputation he has today. But, that's been building and building ever since been building and building ever since been building and building ever since I've known him. In late '60s, In late '60s, In late '60s, Warren was not so interested in stocks Warren was not so interested in stocks Warren was not so interested in stocks anymore. He felt the market was very anymore. He felt the market was very anymore. He felt the market was very high high high and he was buying less and less. and he was buying less and less. and he was buying less and less. And the partnership had grown And the partnership had grown And the partnership had grown considerably.
Questionerconsiderably. So, I don't know whether he mentioned this or not, but I called him up and suggested he buy something that belonged to my wife's family or part of it belonged to my wife's family. And it was a department store in Baltimore. And uh Warren and Charlie flew in because this was a fairly big deal at the time. And uh it was the number one department store in Baltimore. And just like Warren does, I mean, within 24 hours he'd made up his mind that he would the price was right and he would buy it and he liked the people very much. When the when he owned the business for about a year, it was a business that really didn't interest him. It was a retail business. It was very competitive. There were three other competitors all on the same opposite corners in the main thoroughfare of downtown Baltimore. And Warren the while the department store was profitable, very
Questionerdepartment store was profitable, very profitable,profitable,profitable, it kept expanding and it kept puttingit kept expanding and it kept puttingit kept expanding and it kept putting money back into branches and intomoney back into branches and intomoney back into branches and into elevators and into furniture stores andelevators and into furniture stores andelevators and into furniture stores and into outlineinto outlineinto outline outlineoutlineoutline you know, furniture stores.you know, furniture stores.you know, furniture stores. So, he said to me, "You know, I likeSo, he said to me, "You know, I likeSo, he said to me, "You know, I like businesses that throw off cash.businesses that throw off cash.businesses that throw off cash. I don't like businesses that eat a lotI don't like businesses that eat a lotI don't like businesses that eat a lot of cash and this business particularly,of cash and this business particularly,of cash and this business particularly, and I think that's true of a lot ofand I think that's true of a lot ofand I think that's true of a lot of retail businesses and and that's whyretail businesses and and that's whyretail businesses and and that's why there's very few department storesthere's very few department storesthere's very few department stores around today.around today.around today. They do require a lot of capitalThey do require a lot of capitalThey do require a lot of capital expenditures."expenditures."expenditures." So, Warren said,So, Warren said,So, Warren said, "Why don't you think about selling it?""Why don't you think about selling it?""Why don't you think about selling it?" So, I did.So, I did.So, I did. AndAndAnd Warren had very goodWarren had very goodWarren had very good relationships with the management.relationships with the management.relationships with the management. And I think they were all in favor of itAnd I think they were all in favor of itAnd I think they were all in favor of it and uhand uhand uh I mean, they really wanted to pleaseI mean, they really wanted to pleaseI mean, they really wanted to please Warren and I thinkWarren and I thinkWarren and I think I think one of the things about WarrenI think one of the things about WarrenI think one of the things about Warren isisis when he buys a business,when he buys a business,when he buys a business, people love him.people love him.people love him. And they
QuestionerAnd they and they and they try their best and they try their best and they try their best to do their very best to do their very best to do their very best while he owns this while he owns this while he owns this the operation. the operation. the operation.
QuestionerSo, to come back to your point about So, to come back to your point about So, to come back to your point about Dempster, Dempster, Dempster, he was not buying the greatest he was not buying the greatest he was not buying the greatest businesses in the world. He was buying businesses in the world. He was buying businesses in the world. He was buying difficult businesses that were selling difficult businesses that were selling difficult businesses that were selling at big discounts. I mean, Dempster made at big discounts. I mean, Dempster made at big discounts. I mean, Dempster made I think windmills. I think windmills. I think windmills. So, how big a market was there for So, how big a market was there for So, how big a market was there for windmills in those days? windmills in those days? windmills in those days? And uh And uh And uh I would think that the electric motor I would think that the electric motor I would think that the electric motor and other things have changed the and other things have changed the and other things have changed the business considerably. business considerably. business considerably.
WarrenBut so But so But so me, but he bought Dempster very, very me, but he bought Dempster very, very me, but he bought Dempster very, very cheaply and made a fair amount of money cheaply and made a fair amount of money cheaply and made a fair amount of money out of it. But uh out of it. But uh out of it. But uh it's not characteristic of what he does it's not characteristic of what he does it's not characteristic of what he does today. And he learned over the years, today. And he learned over the years, today. And he learned over the years, also. When he bought Berkshire, he had he had he had become very interested in the insurance become very interested in the insurance become very interested in the insurance business. And business. And business. And because of his interest in GEICO, because of his interest in GEICO, because of his interest in GEICO, he learned a lot about the insurance he learned a lot about the insurance he learned a lot about the insurance business and he was a very fast learner. business and he was a very fast learner. business and he was a very fast learner. And he understand stood these businesses
CharlieAnd he understand stood these businesses extremely well. So, again, he knew exactly where he was going over the years, but it started out very slowly in Berkshire. Meanwhile, he was interested in making as much money for Berkshire as possible. So, occasionally I would come up with some idea for him. And uh we would go into it. And uh whenever he worked he joined me in anything or I joined him, it was a great success. It's true that you know, he had very good friends like Walter Schloss. And that's what they were doing. But I think Warren was well above the cigar butt philosophy in the late '60s. And wasn't buying cigar butts cuz they weren't big enough and he didn't want to waste his time on them. And there were there were other very reasonably priced securities that we you could buy and do extremely well. And uh everything that I ever suggested to Warren that interested him,
CharlieWarren that interested him, he always made a big contribution that made it more valuable than I even thought about and faster. When Warren lost his wife, he tried to have a composure that was reasonably you know, composed. But you could see inside he was suffering greatly and he let it go once in a while. And cuz we I flew out there with a couple friends of Warren's and we paid a visit. And my wife was along and you could just see the pain that he was going through. I think he became much more you know, I could see it towards his kids and towards his family and everything else. He did change over the years, no doubt about it. But I don't remember a lot of tough things. He was a softy in many respects. He might have been a little tough with the kids once in a while, but that's cuz he in the early years, he wasn't really into running the kids. It was Susie that ran the kids. So, uh he was much more aloof than he
Questionerhe was much more aloof than he was later on.
QuestionerBut look at the family today. Bill Ruane had just started his firm and Warren had asked him cuz Warren thinks ahead of time all the time. Warren asked him to start a small fund for small investors that would invest the way Bill invested at the time. So, Bill started Sequoia Fund, which of course has become very, very successful. And all of accounts that were small, let's say under 100,000 or so, he would suggest that they go under Sequoia. There were other clients that were larger and I guess some of those went to Bill and some went to me. And I still have fortunately the heirs of of one or two of those now. And they've been very good clients. There were a very few hedge funds back then. There was A.W. Jones, there was Steinhardt, there were a couple of others. And they were Well, there was an interview actually in the paper about this that got one of them in trouble
Questionerthem in trouble about fancy information. And there was a lot of fancy information being passed around between the brokers and the and the some of the funds and some of the investors. And Warren, I don't think wanted any part of that. He was not somebody who wanted to get inside information cuz he was all by himself. And if he had his Value Line in front of him, he could appraise a company in a very few minutes and very successfully.
QuestionerWell, we had an analyst at the firm who had done a fair amount of work on a company called Home Insurance. And it was selling at around 17 and 1/2, 18, which is almost half book value. And so, I sent the report out to Warren that we had. And Warren read it and said, "Let's start buying it." So, I mean Warren had much more buying power centralized than than we did. And uh so, Warren really bought a substantial piece of this.
Questionerpiece of this.
Questionerpiece of this. And I bought some of it for clients.
QuestionerAnd I bought some of it for clients.
QuestionerAnd I bought some of it for clients. And we were paying an average of 18, 19 dollars a share for quite a while.
Questionerwe were paying an average of 18, 19 dollars a share for quite a while.
Questionerwe were paying an average of 18, 19 dollars a share for quite a while. And after Warren got to 10% in Berkshire,
QuestionerBerkshire, and he had to disclose his holdings,
Questionerand he had to disclose his holdings, he decided maybe it was a good opportunity to sell it.
Questionerhe decided maybe it was a good opportunity to sell it.
Questioneropportunity to sell it. So, he suggested to me that I try out somebody in Chicago that he had done business with a earlier about a position he had that I wasn't involved in called Lone Star Steel.
QuestionerSo, he suggested to me that I try out somebody in Chicago that he had done business with a earlier about a position he had that I wasn't involved in called Lone Star Steel.
QuestionerSo, I went out there, I spoke to them, gave a report on Home Insurance.
Questionerspoke to them, gave a report on Home Insurance.
Questionerspoke to them, gave a report on Home Insurance. And lo and behold, they loved the idea even though there were this was a an old railroad holding company.
QuestionerAnd lo and behold, they loved the idea even though there were this was a an old railroad holding company.
Questionerthis was a an old railroad holding company. And they made an offer for the stock we had and we got we had some other insurance companies that joined us.
QuestionerAnd they made an offer for the stock we had and we got we had some other insurance companies that joined us.
Questionerhad and we got we had some other insurance companies that joined us. Or and they made the offer at 30 bucks a share.
QuestionerOr and they made the offer at 30 bucks a share.
Questionerand they made the offer at 30 bucks a share. But Warren thought the stock was worth substantially more than 30 dollars. So,
QuestionerBut Warren thought the stock was worth substantially more than 30 dollars. So,
Warrensubstantially more than 30 dollars. So, when we sold the stock,when we sold the stock,when we sold the stock, we made an agreement that if they resoldwe made an agreement that if they resoldwe made an agreement that if they resold it at a higher price, that we wouldit at a higher price, that we wouldit at a higher price, that we would participate inparticipate inparticipate in a good part of the profits.a good part of the profits.a good part of the profits. And sure enough, when they tried toAnd sure enough, when they tried toAnd sure enough, when they tried to move in on Home Insurance because theymove in on Home Insurance because theymove in on Home Insurance because they had this big block of stock, a millionhad this big block of stock, a millionhad this big block of stock, a million shares, the management didn't want anyshares, the management didn't want anyshares, the management didn't want any part of them.part of them.part of them. And so,And so,And so, that's one of the things that was goingthat's one of the things that was goingthat's one of the things that was going on in these days. There wereon in these days. There wereon in these days. There were there was a company called Citythere was a company called Citythere was a company called City Investing.Investing.Investing. It was a high flyer of the first orderIt was a high flyer of the first orderIt was a high flyer of the first order back then.back then.back then. And they offered a almost 100 dollars aAnd they offered a almost 100 dollars aAnd they offered a almost 100 dollars a share for Home Insurance because it hadshare for Home Insurance because it hadshare for Home Insurance because it had a lot of assetsa lot of assetsa lot of assets and they were asset light.and they were asset light.and they were asset light. So,So,So, uh they took over.uh they took over.uh they took over. And of course,you know, from a value standpoint,you know, from a value standpoint,you know, from a value standpoint, you couldn't compete with people likeyou couldn't compete with people likeyou couldn't compete with people like that. Within a year or two, got into bigthat. Within a year or two, got into bigthat. Within a year or two, got into big trouble and and had to liquidate.trouble and and had to liquidate.trouble and and had to liquidate. But I think that was true of the times.But I think that was true of the times.
CharlieBut I think that was true of the times. I mean, there was a lot of high flyers out there that were you know, taking over it's like the conglomerates today. Bidding wars, everything else was going on back then. And I don't think Warren liked that at all. We had another opportunity. Uh we had a couple, but I must say in anything that I suggested to Warren, turned out to be much better than what I ever thought. And this was a company called Studebaker, which was going out of the uh car business. And they had a huge tax loss. So, I called up Warren, I told him that we had done work on on Studebaker. They had started to diversify. They owned a company called Onan, which was which is still a well-known manufacturer of uh generators. They owned another company called STP, which was really the the most important company they owned, which was the additive to
Charliewhich was the additive to your car toyour car toyour car to supposedly be good for your engine.supposedly be good for your engine.supposedly be good for your engine. So, STP was an unknown quantity. YouSo, STP was an unknown quantity. YouSo, STP was an unknown quantity. You couldn't get any information in thosecouldn't get any information in thosecouldn't get any information in those days about it, and companies didn'tdays about it, and companies didn'tdays about it, and companies didn't supply that kind of information.supply that kind of information.supply that kind of information. But, we knew there was a big tax loss inBut, we knew there was a big tax loss inBut, we knew there was a big tax loss in Studebaker, and there was a lot ofStudebaker, and there was a lot ofStudebaker, and there was a lot of assets,assets,assets, and uh it was looked like a very, veryand uh it was looked like a very, veryand uh it was looked like a very, very cheap stock.cheap stock.cheap stock. So, we started to buy it,So, we started to buy it,So, we started to buy it, and Warrenand Warrenand Warren dispatcheddispatcheddispatched either a friend of his or one of theeither a friend of his or one of theeither a friend of his or one of the people in the office, and I don't Ipeople in the office, and I don't Ipeople in the office, and I don't I forget who it was. Could have been Billforget who it was. Could have been Billforget who it was. Could have been Bill Scott, but I'm not sure. And they wentScott, but I'm not sure. And they wentScott, but I'm not sure. And they went out to the railroad track outside theout to the railroad track outside theout to the railroad track outside the factory, which was near Chicago,factory, which was near Chicago,factory, which was near Chicago, and they counted the number ofand they counted the number ofand they counted the number of railroad cars going into the factory,railroad cars going into the factory,railroad cars going into the factory, and the number of railroad cars thatand the number of railroad cars thatand the number of railroad cars that were coming out of the factory,were coming out of the factory,were coming out of the factory, and that gave Warren and ourselves someand that gave Warren and ourselves someand that gave Warren and ourselves some idea of the size ofidea of the size ofidea of the size of STP.STP.STP. And weAnd weAnd we we bought quite a bit of stock.
Charliewe bought quite a bit of stock. And in those days, I was working pretty hard, and I would leave the office and around 7:00 8:00 at night, and uh I'd go to Grand Central Station and catch the train. So, there was no such thing as quote machines, but I would buy the Herald Tribune, which had a e- a morning edition that came out at 9:00 at night. It had all the prices in it. So, I picked I started to leaf through the paper, and there was a full-page ad by a man in uh I think his name was Murphy in Honolulu, who was in the uh in the car business. He was offering $35 a share for the stock that we had been buying between 18 and 20. I like that price range. So, I called up Warren 10:00 11:00 at night when I got home. I said, "Warren, this guy who's a car dealer is has this full-page ad and is making this offer on Studebaker." So, Warren said to me, without blinking
QuestionerSo, Warren said to me, without blinking at all, without hesitating, he said,at all, without hesitating, he said,at all, without hesitating, he said, "Okay," he says, "tomorrow morning, go"Okay," he says, "tomorrow morning, go"Okay," he says, "tomorrow morning, go into the crowd on on it was listed oninto the crowd on on it was listed oninto the crowd on on it was listed on the stock exchange, and buy everythingthe stock exchange, and buy everythingthe stock exchange, and buy everything that at the opening. Just clean it allthat at the opening. Just clean it allthat at the opening. Just clean it all up."up."up." So, that's what we did.So, that's what we did.So, that's what we did. And that was the end of that bid,And that was the end of that bid,And that was the end of that bid, because the stockbecause the stockbecause the stock went up above that.went up above that.went up above that. So, thenSo, thenSo, then the question was, "What will we do?" So,the question was, "What will we do?" So,the question was, "What will we do?" So, a couple of days later, I got a calla couple of days later, I got a calla couple of days later, I got a call from somebody I knew out in California,from somebody I knew out in California,from somebody I knew out in California, and he wasand he wasand he was he was trying to put a deal together.he was trying to put a deal together.he was trying to put a deal together. So, he offered us 44 bucks for the stockSo, he offered us 44 bucks for the stockSo, he offered us 44 bucks for the stock thatthatthat we had cleaned up at around 35. That waswe had cleaned up at around 35. That waswe had cleaned up at around 35. That was the opening.the opening.the opening. And uhAnd uhAnd uh they were wild and woolly days backthey were wild and woolly days backthey were wild and woolly days back then. So,then. So,then. So, umI said, "Okay, we'll do it.I said, "Okay, we'll do it.I said, "Okay, we'll do it. We'll sell it to you."We'll sell it to you."We'll sell it to you." I thought it was a very rich price.I thought it was a very rich price.I thought it was a very rich price. So,he who he didn't have the money, and hehe who he didn't have the money, and hehe who he didn't have the money, and he didn't have the client.didn't have the client.didn't have the client. AndAndAnd maybe in the next couple of hours, hemaybe in the next couple of hours, hemaybe in the next couple of hours, he called up Warren and said, "I have this
Othercalled up Warren and said, "I have this terrific company for sale." And of course, Warren said, "I'm the seller." So, anyhow, he had we had put the trade up on the New York Stock Exchange, and he was obligated. So, it went through finally. The black bank, though, Yeah. was probably part of Susie's influence. He had a good friend by the name of Nick Newman, and Nick and he he had a grocery chain that was in Omaha and some of the other cities. I forget where, but a very nice guy, and a good friend of Warren's, and together they took an active part in helping the black community, and I'm sure that that was Susie's influence. Omaha was a pretty segregated area back then, and uh Warren belonged to the Omaha Country Club, and uh his friends that were Jewish belonged to Happy Hollow. So, Warren wanted to break down the barriers at at the Omaha Country Club, and also there was I think a another club, an
Otherthere was I think a another club, an eating club downtown, for lunches, that was also very exclusive. So, Warren felt the only way he could do it was to apply to the Jewish Country Club for membership. And the Country Club directors had a great deal of trouble with that. On the one hand, they wanted to have Warren as a member. On the other hand, there was a limit to how many members they could have, and they had a waiting list that was all Jewish potential members, and he was taking one of those spots. So, there was a real thought process that went into that. And I think that they finally saw what Warren was trying to do, and they pushed it through, and he he joined that club. Now, I don't know about the other side. I don't know at what point whe- whether they ever did open up or not, but uh I do know about Happy Hollow. Now, I think Warren is free of all
CharlieNow, I think Warren is free of all prejudice, completely free of it. And if he learned that from his father, I wasn't aware of it, but he has no prejudice whatsoever. White, yellow, black, doesn't make any difference to him.
CharlieI'm not sure that I'm 100% right on this, but in those days, Salomon was a very, very cheap stock. It was selling for much less than its value, and they had done some things in mergers, etc., that affected the value.
CharlieSo, I actually discussed Salomon Brothers with him as a potential candidate, cuz it was right there in Value Line, and uh I'd done some work on it. And Salomon was a pretty good franchise at the time. I mean, they were top trader. Every every large block of stock went through Salomon Brothers, and uh they were a very, very aggressive, successful firm.
CharlieWarren made up his mind to go ahead and buy this buy this there was a a block of stock that was available, and he bought that
Questionerthat was available, and he bought that block of stock. And it was a cheap price. But, he didn't know at the time anything about what he was getting into as far as, you know, getting into trouble with the government about government bonds. And that came up shortly after he got involved. I don't know to this I mean, I think Warren was sorry that he got involved, but Warren and Charlie went on the board, and Charlie couldn't stand what was going on there, and didn't like the culture at all. And uh I think that you know, when the thing exploded, Warren had 24 hours or less to make up his mind as whether he was going to go forward or just bow out. And I think at that point, Salomon Brothers could have gone into bankruptcy. And Warren stepped up and took responsibility, which is not so characteristic of of him. He likes other people to step up and take the responsibility and work things out.
Otherthe responsibility and work things out.
OtherBut, uh certainly in in Salomon Brothers, he deserves every bit of praise. And as you know, every year at the Were you at the annual meeting this year?
OtherSo, he's they In that movie, almost every year, they show his testimony in front of the uh committee.
OtherSo, I thought it I think in the final analysis, it it burnished his reputation.
OtherBut, at the time, he was very upset about it.
OtherEverybody on Wall Street by that time knew about Warren.
OtherUh whether investors knew about Warren so much, I never thought about that, and I can't answer that question.
OtherUh Certainly, his reputation by that time had really And it was no no secret. And I'm not so sure it was no no secret. And I'm not so sure he he certainly didn't have that in mind when he went into Solomon Brothers. I mean, he had an investment and he had a responsibility and he faced up to it.
OtherBut I don't think he was looking at it
OtherBut I don't think he was looking at it that this would improve his reputation on a national basis. I just don't think so.
OtherCharlie met Warren through a doctor friend. Charlie comes from Omaha. So, he met Warren through a friend of his who was a doctor. I think he was a doctor and an investor in Warren's partnership. And Charlie was starting a small partnership after his career in law out in LA because Charlie saw that there was more money in running a partnership than running a law firm. So, he started this firm called Munger, Wheeler and Company. And uh Charlie was a very very bright man and a very good lawyer at the time. And he met Warren in about a year before I couple years before I met him maybe. And around probably around 1960 or 59 through this doctor friend. And you know, same thing. I mean, he met Warren and and had the same reaction that I did or anybody else that
Questionerreaction that I did or anybody else that meets Warren says wow. And I think Warren thought about Charlie in the same way. But I would say Charlie has been a very very strong anchor for Warren. Uh when we we made one investment together in a in that store in Baltimore cuz Warren convinced us each to buy 10% and from then on we we we were involved in a company called Diversified Retailing till the a number of years later. And uh every time Warren wanted to do something and he would pass it by Charlie and pass it by me. I was 100% in favor of it. Charlie always had a couple of strong reservations. So, I think Charlie has been sort of an anchor man and uh he's been very useful to Warren in uh in pointing out some of the problems. There was an element of fraud involved in this this man at Solomon Brothers who had broken the law of the Federal Reserve I think on how many
WarrenFederal Reserve I think on how many bonds you could buy in a governmentbonds you could buy in a governmentbonds you could buy in a government auction.auction.auction. And he had gone way above that.And he had gone way above that.And he had gone way above that. And he hadAnd he hadAnd he had hehehe took the inventory and when the bondtook the inventory and when the bondtook the inventory and when the bond went up a little bit he would sell itwent up a little bit he would sell itwent up a little bit he would sell it out and make a sub- substantial profitout and make a sub- substantial profitout and make a sub- substantial profit for Solomon Brothers.for Solomon Brothers.for Solomon Brothers. And they used their capital that wayAnd they used their capital that wayAnd they used their capital that way I think many times.I think many times.I think many times. So,So,So, whenWell, you know the story. I mean, heWell, you know the story. I mean, heWell, you know the story. I mean, he went to good friendwent to good friendwent to good friend and said,and said,and said, "You know, I got a problem." Because he"You know, I got a problem." Because he"You know, I got a problem." Because he had gotten I guess a questionnaire fromhad gotten I guess a questionnaire fromhad gotten I guess a questionnaire from the government.the government.the government. And good friendAnd good friendAnd good friend didn't react the way he should have atdidn't react the way he should have atdidn't react the way he should have at the time. Hethe time. Hethe time. He he didn't say, "Let'she didn't say, "Let'she didn't say, "Let's let's get down there confess and say,let's get down there confess and say,let's get down there confess and say, mea culpa andmea culpa andmea culpa and make a deal."make a deal."make a deal." So,So,So, they he sort of kept it to himself.they he sort of kept it to himself.they he sort of kept it to himself. And I think whenAnd I think whenAnd I think when Brady moved in, if it was Brady or theBrady moved in, if it was Brady or theBrady moved in, if it was Brady or the Fed moved in or the Treasury Department,Fed moved in or the Treasury Department,Fed moved in or the Treasury Department, they were very much at risk of losingthey were very much at risk of losingthey were very much at risk of losing their ability to trade governments. Ittheir ability to trade governments. It
Questionertheir ability to trade governments. It was going to be taken away from them.was going to be taken away from them.was going to be taken away from them. And uhAnd uhAnd uh I thinkI thinkI think Warren had to step inWarren had to step inWarren had to step in in a very short period of time. I mean,in a very short period of time. I mean,in a very short period of time. I mean, it could have beenit could have beenit could have been 242424 or 48 hours and he made the decisionor 48 hours and he made the decisionor 48 hours and he made the decision that he would step in. It certainlythat he would step in. It certainlythat he would step in. It certainly redounded to his benefit because he cameredounded to his benefit because he cameredounded to his benefit because he came out very well, but it was aout very well, but it was aout very well, but it was a heartbreaking thing for a while.WarrenWarrenWarren as an analyst went down to Washingtonas an analyst went down to Washingtonas an analyst went down to Washington one weekendone weekendone weekend andandand I mean, lo and behold he knocks on theI mean, lo and behold he knocks on theI mean, lo and behold he knocks on the door of thisdoor of thisdoor of this companycompanycompany and you know, nobody's there in theand you know, nobody's there in theand you know, nobody's there in the office and finally some watchman answersoffice and finally some watchman answersoffice and finally some watchman answers the door and says, "What do you want?"the door and says, "What do you want?"the door and says, "What do you want?" And Warren says, "You know, I'mAnd Warren says, "You know, I'mAnd Warren says, "You know, I'm I'm a research analyst and I'd love toI'm a research analyst and I'd love toI'm a research analyst and I'd love to interview theinterview theinterview the speak to the president." So, he byspeak to the president." So, he byspeak to the president." So, he by chance he was in his office upstairs.chance he was in his office upstairs.chance he was in his office upstairs. And Warren went up to meet him and heAnd Warren went up to meet him and heAnd Warren went up to meet him and he was enthralled by this man and the manwas enthralled by this man and the manwas enthralled by this man and the man spent the better part of the day talkingspent the better part of the day talkingspent the better part of the day talking to Warren about the GEICO and what a
Otherto Warren about the GEICO and what a good business the insurance business was. And of course under Warren's aegis years later GEICO became a much much more important business. And uh really went all out in the mail order business and made it very very efficient. But what Warren likes about any of those businesses is that he has a fair amount of money that's sitting there as supposedly as float. And he can use the float to invest in other things. So, GEICO was making after had a very low expense ratio because they were very very efficient at GEICO at the time and they became even more efficient. And the expense ratio was low compared to all the other insurance companies. So, they were earning money when it was difficult for other companies to earn money. And in addition they had this big reservoir of money that was float. Now, the float in the in the automobile insurance business is
Otherin the automobile insurance business is not as good as the float at the other companies he has. But it's substantial. And it adds up into what is a large float of free money that Warren can take to buy businesses and to invest. So, it's a twofer.
OtherAs far as I know, Charlie had a man working for him who had been I think a petroleum engineer. And Charlie and Warren were approached on See's and they were going to make an offer that was below what See's wanted. And this man piped up and said, "You know, you're doing the wrong thing. This is a high quality business. It's it's going to have substantial growth. There's plenty of leeway to raise the price on chocolates. And you really should raise your bid because you're buy- you're not buying an asset. You're buying a name. You're buying a brand. You're buying a real franchise here." So, they did raise their bid.
OtherSo, they did raise their bid. And they bought it. And of course looking back it was the start of buying good businesses at relatively favorable prices. And Charlie was more responsible for that than anybody. Warren has this I shouldn't say theory. It's a uh It's not a proverb either, but he he has a strong feeling which he communicates to all of us that if you buy a good business and you stay with it for a long time, you're going to make a fair amount of money. And that's really what what Berkshire is and what some of the companies that Warren's bought. I mean, he's made a lot of money buying Coca-Cola even though it's now subject to criticism. He's made a lot of money in American Express doing that. He's made a lot of money in a lot of companies and I think that all of us learned a lot out of that See's. Probably 1972-73. For some reason New York Times went public with a restricted stock and A and B. And
CharlieAnd a whole group of previously privately owned companies also became public. And the stocks all fell down. Market was going down and these stocks went down. And Washington Post went down substantially from its initial offering price. So, Warren started to buy some stock. And I must say, you know, Warren is very good about sharing his thoughts with people and directing them in in in various ways. And he had he had talked to a whole I mean, Carol I'm sure told you about the group meetings that we had. And he had talked about you know, the value of broadcasters, the value of newspapers, etc. He saw real value and in these newspapers and also not only the franchise value but the thrill of being involved in a newspaper like Washington Post and Kay Graham had some advisers in those days that were on the board that checked Warren out and here was
Questionerthat checked Warren out and here was this young guy that was buying a big piece of Washington Post and they were very very suspicious about it. I had my wife and I happened to be out in California. We visited with Warren during the summers then. He had a place in Laguna and we would go out and we'd play golf and we'd go out at night with Susie and occasionally with Charlie etc. And uh Warren had invited Kay Graham out directly. She was strong enough to say to herself I'm not going to listen to all my advisers. I want to find out for myself. So she came out to California and she met him. And I I was there at the time and this is a story you won't get from many people but anyhow Warren started talking to her and he and you know when Warren starts to talk he he's very convincing and he can talk for a long time. So she's she looked out the window and here was this beautiful beach and the
Otherhere was this beautiful beach and thehere was this beautiful beach and the beautiful it was a beautifulbeautiful it was a beautifulbeautiful it was a beautiful U-shaped coveU-shaped coveU-shaped cove and she said I think I'll go for a swim.and she said I think I'll go for a swim.and she said I think I'll go for a swim. So she changed into a bathing suit cameSo she changed into a bathing suit cameSo she changed into a bathing suit came downstairs Warren started thedownstairs Warren started thedownstairs Warren started the conversation again. We walked down toconversation again. We walked down toconversation again. We walked down to the beach. I was I was there. Warren isthe beach. I was I was there. Warren isthe beach. I was I was there. Warren is fully dressed. He started walking intofully dressed. He started walking intofully dressed. He started walking into the waterthe waterthe water and Warren doesn't swim and he doesn'tand Warren doesn't swim and he doesn'tand Warren doesn't swim and he doesn't go in the watergo in the watergo in the water and all of a sudden when he got up toand all of a sudden when he got up toand all of a sudden when he got up to his waist he realized he was in thehis waist he realized he was in thehis waist he realized he was in the water.And he turned around and and went out.And he turned around and and went out.And he turned around and and went out. But uhBut uhBut uh he was thrilled by her visit and I thinkhe was thrilled by her visit and I thinkhe was thrilled by her visit and I think she was veryshe was veryshe was very taken with Warren from that on.taken with Warren from that on.taken with Warren from that on. So she didn't listen to her advisers atSo she didn't listen to her advisers atSo she didn't listen to her advisers at all.My brother threw a smallMy brother threw a smallMy brother threw a small birthday party for mebirthday party for mebirthday party for me at the hotel up townat the hotel up townat the hotel up town andandand there were probablythere were probablythere were probably 35 or 40 people there.35 or 40 people there.35 or 40 people there. Good friends and Warren and Susie came.Good friends and Warren and Susie came.Good friends and Warren and Susie came. Susie sang.Susie sang.Susie sang. And then there were a lot of toastsAnd then there were a lot of toastsAnd then there were a lot of toasts afterwards.afterwards.
Otherafterwards. And Warren's toast was may you live to Berkshire splits. And that was 30 years ago and so far so good. I'm here. Warren hasn't split the stock. So that's made a made a big difference in my life cuz I think about that often.
WarrenWell, I mean if Bill Ruane was here he'd really tell you about it but you know Susie was interested in singing in front of various groups and she was going she would she was willing to go to various night semi-night clubs in New York and sing there. Maybe it was for the experience or maybe she wanted to do it because she enjoyed it. But anyhow they would come to New York and Bill would arrange for her to sing at various small little clubs and and we would go and listen to her. But uh she loved it and uh Bill really killed himself setting up those dates for her. And uh I think Warren was very proud. She had a very wonderful voice yeah and she had a
Othervery wonderful voice yeah and she had a very wonderful voice yeah and she had a good set she sang the oldies really you good set she sang the oldies really you good set she sang the oldies really you know show tunes that sort of stuff.
OtherWarren like nobody else I know has had an like nobody else I know has had an like nobody else I know has had an enormous loyalty enormous loyalty enormous loyalty to all of us. to all of us. to all of us. There's nobody that he's ever turned his There's nobody that he's ever turned his There's nobody that he's ever turned his back on that I know of. back on that I know of. back on that I know of. The group that we had The group that we had The group that we had maybe Warren maybe Warren maybe Warren outgrew many of the people in it. outgrew many of the people in it. outgrew many of the people in it. Uh Uh Uh but he never abandoned anybody and he but he never abandoned anybody and he but he never abandoned anybody and he always inclusive always inclusive always inclusive and he was very very loyal. and he was very very loyal. and he was very very loyal. We had a group of eight of us We had a group of eight of us We had a group of eight of us that would go out to the West Coast and that would go out to the West Coast and that would go out to the West Coast and play golf at Pebble and three other play golf at Pebble and three other play golf at Pebble and three other golf clubs golf clubs golf clubs over a four-day period. over a four-day period. over a four-day period. And Warren was getting busier and busier And Warren was getting busier and busier And Warren was getting busier and busier and busier but yet every every two years and busier but yet every every two years and busier but yet every every two years he would show up and he would he would show up and he would he would show up and he would play golf for four days even though play golf for four days even though play golf for four days even though it wasn't his greatest interest in the it wasn't his greatest interest in the it wasn't his greatest interest in the world. world. world. And And And as far as the the meetings that he had as far as the the meetings that he had as far as the the meetings that he had well he was meeting all of famous people well he was meeting all of famous people well he was meeting all of famous people in the world and everybody was coming to in the world and everybody was coming to in the world and everybody was coming to his doorstep
Warrenhis doorstep but he remained very very loyal to all of his friends and of course that group that Carol described to you was composed for the most part of people that he knew starting back in the '60s. So I I don't know anybody like that that you know he could he could get down to the president's home at any time he wanted to and in fact there's some great stories he he was invited out to Ray he was invited out with Reagan to Walter Annenberg's home in uh Palm Springs. Walter Annenberg had this house that was a fairly well-known house evidently. It's now an institution. But uh he would invite various people down for weekends and you know Warren was getting to be very big in the newspaper business and he was a great investor and so Walter wanted to cultivate Warren so he invited him out when he had Reagan who was then president for the weekend.
Otherpresident for the weekend. And Warren went out there and there were other people out there too and everybody had their own room and they had attendants that were helping them you know unpack and pack and it was it was all very im- very very uh impressive and luxurious. So Walter had a nine-hole golf course that he played as 18 holes. And every single ball on the range or that they used was a brand new ball. It was never hit twice just one trip on a ball. So Annenberg with all of his friends said to his friends who were there golfers saying I've reserved starting times for you across the street at one of the courses. I forget the name of it. Could have been Thunderbird or one of those. He says it's too crowded over here. So Walter and Reagan and Warren went out to play golf on this golf course. They were the only ones but it was kind of cute that they he sent
Otherit was kind of cute that they he sent everybody across the street say it's too crowded. But so Warren had some good stories about his various things and uh I mean Warren could go any place he wanted to by that time but he was extremely loyal to every one of his friends.
CharlieWe never bought Berkshire directly. We got our stock through diversified the same way as Charlie got most of his stock. And I don't know of a better investment for my children and my grandchildren and maybe a couple people that will come after it than Berkshire as long as the culture remains the same and that's the most important thing. And I know that the people who are coming along and that we're thinking about as potential replacements for Warren someday have a very strong sense of culture and have a very strong sense of obligation to Warren and everything Warren stands for.
Questionereverything Warren stands for. So I have no doubt that you know for 25 years afterwards the culture isn't going to change and meanwhile you own a group of companies that are extraordinary and uh maybe uh new management will do a few things that Warren might not have done but otherwise they're going to be very strong value-oriented people and uh very decent decent honest individuals. You know anytime Warren says something you can take it to the bank. And I think people understand that. And uh But but I think Berkshire really stands for for culture is complete decency and honesty. Yes. There was a time before Warren made his big gifts to the Gates Foundation that he was getting criticized and you can see it in the blogs that were written back then and some of the letters and other things that here was this very very rich man who was getting richer every year and really wasn't giving a lot of money
Otherand really wasn't giving a lot of money away. And there was terrific criticism by some people which Warren never said anything about and didn't answer. But all along people were getting very rich on owning Berkshire, particularly those people who were started out in the early days with a few dollars in his partnership. And I mean, there were There are still instances of where you've got this man in who died a couple years ago in Brooklyn who came from He was a professor at Brooklyn, I think, Polytechnic. And he left a fortune of 7 800 million dollars. Nobody ever heard of him before, but he had been a partner of the uh of the original partnership, put a few dollars in, and you know, had given most of it away. He didn't have any children. And there was a There was actually a rabbi in in uh in Omaha. It was a great story. Uh his name was Kripke.
WarrenUh his name was Kripke. AndAndAnd his wife methis wife methis wife met Susie because his wife was drawingSusie because his wife was drawingSusie because his wife was drawing children's books.children's books.children's books. AndAndAnd Susie met her because she was interestedSusie met her because she was interestedSusie met her because she was interested in in the books.in in the books.in in the books. And so, she called up, and she met her.And so, she called up, and she met her.And so, she called up, and she met her. And then, she thought she was charming,And then, she thought she was charming,And then, she thought she was charming, and so, they started playing bridge atand so, they started playing bridge atand so, they started playing bridge at night withnight withnight with once a month or once every couple weeksonce a month or once every couple weeksonce a month or once every couple weeks with the rabbi and his wife. And theywith the rabbi and his wife. And theywith the rabbi and his wife. And they had had a very strong friendship.had had a very strong friendship.had had a very strong friendship. And theAnd theAnd the the wife said Warren was young andthe wife said Warren was young andthe wife said Warren was young and running the partnership. Warren said torunning the partnership. Warren said torunning the partnership. Warren said to the rabbi I mean, his wife said to thethe rabbi I mean, his wife said to thethe rabbi I mean, his wife said to the rabbi,rabbi,rabbi, "You really should put some money into"You really should put some money into"You really should put some money into thethethe Warren's partnership because, you know,Warren's partnership because, you know,Warren's partnership because, you know, his brilliance always shown through."his brilliance always shown through."his brilliance always shown through." And the rabbi was very reluctant becauseAnd the rabbi was very reluctant becauseAnd the rabbi was very reluctant because this was his retirement fund. Butthis was his retirement fund. Butthis was his retirement fund. But finally, he did put some money in, veryfinally, he did put some money in, veryfinally, he did put some money in, very small amount.small amount.small amount. And when he retired,he had a few I think he had ahe had a few I think he had ahe had a few I think he had a a son, and I don't know who else he had.a son, and I don't know who else he had.
Charliea son, and I don't know who else he had. I think he's still alive in that he's in an old age home in in Omaha. But he had given Nobody thought he had I don't think he ever made more than 15 or 16,000 dollars a year as a salary. But he gave something like 30 or 40 million dollars to the seminary in New York for a brand new entrance hall and research facility, I think. And nobody ever heard of him before. And these people are all popping up all over. And I heard a story about somebody the other night who made a a large gift. Uh somebody who really was quite poor and and had come over They were Holocaust victim. They had put a few bucks into Warren's partnership, and uh they gave hundreds of millions of dollars to some university. And you You hear about it all the time where I know in in my case, I mean, I thank Warren all the time because I
CharlieWell, I don't give away the Berkshire. Well, I don't give away the Berkshire. Well, I don't give away the Berkshire. That's sort of sacrosanct, but uh That's sort of sacrosanct, but uh That's sort of sacrosanct, but uh it's made it possible for me to make a it's made it possible for me to make a it's made it possible for me to make a fair amount of major gifts fair amount of major gifts fair amount of major gifts that have that have that have brought joy to the whole family. brought joy to the whole family. brought joy to the whole family. So, I think it it you know, Warren's So, I think it it you know, Warren's So, I think it it you know, Warren's influence on influence on influence on giving things away and charity has been giving things away and charity has been giving things away and charity has been a real leadership position. And people a real leadership position. And people a real leadership position. And people just don't appreciate it that much. just don't appreciate it that much. just don't appreciate it that much. And And And you know, the you know, the you know, the I think I think I think what he's done with his children is is what he's done with his children is is what he's done with his children is is terrific. I mean, you you spoke to terrific. I mean, you you spoke to terrific. I mean, you you spoke to Howie, and you spoke to some of those. Howie, and you spoke to some of those. Howie, and you spoke to some of those. They've all thrived because they're They've all thrived because they're They've all thrived because they're running these foundations and are able running these foundations and are able running these foundations and are able to give away money. to give away money. to give away money. And uh And uh And uh I mean, Warren's influence is strong. I mean, Warren's influence is strong. I mean, Warren's influence is strong. And And And he spends his time the way he really he spends his time the way he really he spends his time the way he really you know, he's got only so much time, you know, he's got only so much time, you know, he's got only so much time, and he spends his time very carefully. and he spends his time very carefully. and he spends his time very carefully. But But But he he feels that he has delegated he he feels that he has delegated he he feels that he has delegated Gates as the best person possible to run Gates as the best person possible to run Gates as the best person possible to run a lot of his charitable activities, and
Questionera lot of his charitable activities, and I think he's correct. I think he's correct. I think he's correct. But uh the amount of money that he's made for other people because of Berkshire is extraordinary, and all that money is being given away over the years. And all those remarks about him years ago were just absolutely incorrect.
QuestionerI did not realize the severity of it at when it started. But I was in Omaha for a meeting, and Warren was getting calls left and right from various companies where need you know, that had a lot of leverage and needed funds. And in those days, he would had the opportunity to buy extremely high-yielding preferred stocks that were convertible or had warrants in some very good companies like Goldman Sachs and a host of other companies that made a lot of money for Berkshire in the long run. But I think that the severity of that decline at the time and the crisis and the
Otherand theand the what's happened with housing ever sincewhat's happened with housing ever sincewhat's happened with housing ever since and the effect on employmentwas not I I didn't see itwas not I I didn't see itwas not I I didn't see it coming as strongly ascoming as strongly ascoming as strongly as it came.it came.it came. And it turned out to be one of the mostAnd it turned out to be one of the mostAnd it turned out to be one of the most serious events we've hadserious events we've hadserious events we've had outside of the depression in '29.outside of the depression in '29.outside of the depression in '29. And uhAnd uhAnd uh I think Warren and Charlie bothI think Warren and Charlie bothI think Warren and Charlie both handled themselves extremely well.handled themselves extremely well.handled themselves extremely well. Warren always has this wonderfulWarren always has this wonderfulWarren always has this wonderful view thatview thatview that you get greedy when other people areyou get greedy when other people areyou get greedy when other people are you know, fearful,you know, fearful,you know, fearful, and you get fearful when other peopleand you get fearful when other peopleand you get fearful when other people are greedy.are greedy.are greedy. And certainly, he used that opportunityAnd certainly, he used that opportunityAnd certainly, he used that opportunity to build theto build theto build the build Berkshire. And of course,build Berkshire. And of course,build Berkshire. And of course, BerkshireBerkshireBerkshire is a fortress. It's impregnable as faris a fortress. It's impregnable as faris a fortress. It's impregnable as far as the financial condition.as the financial condition.as the financial condition. But I think the the country was inBut I think the the country was inBut I think the the country was in seriousseriousserious trouble, andtrouble, andtrouble, and I mean, I'm not an expert economist, butI mean, I'm not an expert economist, butI mean, I'm not an expert economist, but thisthisthis fact that interest rates have beenfact that interest rates have beenfact that interest rates have been coming down and down. In fact, they'recoming down and down. In fact, they'recoming down and down. In fact, they're almost no nothing now is still aalmost no nothing now is still aalmost no nothing now is still a reflection of the unemployment and thereflection of the unemployment and the
Questionerreflection of the unemployment and the housing and all the things that are the aftermath of what happened back then. Incidentally, Warren has a great expression about macro people that you know, have a real macro feeling. And I've never forgotten it. He says there's a place in the cemetery that's reserved for all those people who think they can see what's going to happen in the market. Well, I think his message has always been very optimistic about the United States and the place the United States in the world and the place that you really should have your money because the United States is growing and things are so good here in spite of all the problems and everything else. And I think he he fundamentally believes it like nobody else that I know. So, he's a strong believer and a strong salesman on that. In so many ways, Warren has been an enormous influence on me
Othermeme and on our family.and on our family.and on our family. AndAndAnd for example,for example,for example, even though the family some of theeven though the family some of theeven though the family some of the family doesn't care about business atfamily doesn't care about business atfamily doesn't care about business at all,all,all, they all made the trip to Omaha. Theythey all made the trip to Omaha. Theythey all made the trip to Omaha. They all know Warren. They all think theall know Warren. They all think theall know Warren. They all think the world of Omaha of of Warren. They haveworld of Omaha of of Warren. They haveworld of Omaha of of Warren. They have tremendous respect for him and histremendous respect for him and histremendous respect for him and his values.values.values. I use some of Warren's material. I sendI use some of Warren's material. I sendI use some of Warren's material. I send it to the kids so that they can readit to the kids so that they can readit to the kids so that they can read what he has to say aboutwhat he has to say aboutwhat he has to say about you know,about life.about life.about life. AndAndAnd I think he's had an enormous influenceI think he's had an enormous influenceI think he's had an enormous influence on my life and my wife's life. He's madeon my life and my wife's life. He's madeon my life and my wife's life. He's made it much more enjoyable.it much more enjoyable.it much more enjoyable. We've lovedWe've lovedWe've loved some of the friends we've made becausesome of the friends we've made becausesome of the friends we've made because Warren hasWarren hasWarren has One thing that Warren does is he bringsOne thing that Warren does is he bringsOne thing that Warren does is he brings everybody together, and he shareseverybody together, and he shareseverybody together, and he shares everybody. He didn't keep any toeverybody. He didn't keep any toeverybody. He didn't keep any to himself. So, all of Warren's friends,himself. So, all of Warren's friends,himself. So, all of Warren's friends, you know, I got to meet early in theyou know, I got to meet early in theyou know, I got to meet early in the game, andgame, andgame, and Murphy andMurphy andMurphy and Burke and all these other people that weBurke and all these other people that weBurke and all these other people that we know fairly well, the Loomises, etc.know fairly well, the Loomises, etc.
Otherknow fairly well, the Loomises, etc. All came out of being involved with Warren. So, it's been a wonderful experience. It hasn't hurt me from a business standpoint, either. I mean, you know, it's very nice. There's I mean, I I'm very careful about the way I handle myself and uh not to you know, impose on any of Warren's reputation, but still in all, it it rubs off. Warren doesn't forget forget anything he ever says. And uh you know, Warren's going way beyond anything that I can handle. But when we sold Diversified, I was vice chairman, and and Charlie was a vice chairman, primarily because of our ownership. And uh Warren said to me, "Look, come to Berkshire, you can be go a vice chairman just like Charlie, and we're happy to have you. But, he said, "There is a conflict if you if you stay in the money management business, and you're going to be buying
Questionerbusiness, and you're going to be buying these stocks, these stocks, these stocks, you're going to have to report you're going to have to report you're going to have to report everything you buy, and I'm going to everything you buy, and I'm going to everything you buy, and I'm going to have to report everything I buy, have to report everything I buy, have to report everything I buy, and they're going to combine them, and and they're going to combine them, and and they're going to combine them, and it's going to be a problem." it's going to be a problem." it's going to be a problem."
QuestionerSo, I said, "That's fine, Warren. I So, I said, "That's fine, Warren. I So, I said, "That's fine, Warren. I don't need that."
WarrenSo, he said, "If you ever So, he said, "If you ever So, he said, "If you ever get in a position where you're get in a position where you're get in a position where you're out of First Manhattan, out of First Manhattan, out of First Manhattan, my offer stands." my offer stands." my offer stands."
QuestionerSo, So, So, after Susie passed away, after Susie passed away, after Susie passed away, which is now well over 10 years ago, I which is now well over 10 years ago, I which is now well over 10 years ago, I guess, guess, guess, I think the world changed as far as I think the world changed as far as I think the world changed as far as Warren was concerned, and Warren was concerned, and Warren was concerned, and again, loyalty again, loyalty again, loyalty was has been very important, and was has been very important, and was has been very important, and integrity again. integrity again. integrity again. And so, Warren came There was an opening And so, Warren came There was an opening And so, Warren came There was an opening on the board, and Warren came and said, on the board, and Warren came and said, on the board, and Warren came and said, "Would you like to be on the board now?" "Would you like to be on the board now?" "Would you like to be on the board now?" So, I said, So, I said, So, I said, "You know, I'm going to jump at this "You know, I'm going to jump at this "You know, I'm going to jump at this opportunity, but let me think about it opportunity, but let me think about it opportunity, but let me think about it overnight." overnight." overnight."
WarrenSo, Warren said to me, "You know, So, Warren said to me, "You know, So, Warren said to me, "You know, he said, 'You've been a very private he said, 'You've been a very private
Otherhe said, 'You've been a very private person, and the minute you go on the board, you're going to have to start reporting.'"
OtherSo, by that time, I'd given away some of my Berkshire to family, and uh I thought about it, and I felt that the advantages of being on the board versus you know, not being on the board were substantial, and I said, "Great."
OtherSo, that that's another example of his great loyalty.
OtherOh, look, there must be 30 books out about Warren right now, and Warren's influence on the in on the investment world has been unbelievable. Certainly, he deserves much more credit, I think, than than Ben Graham. Uh although Ben Graham has been idolized because to some extent, Warren has pushed that. But, I think Warren's influence is far greater today. And I think for a long, long time, that influence in the financial area is going to be felt. I'm not so sure that you know, any gifts he makes, or any
Questioneryou know, any gifts he makes, or any gifts that the kids make, are going to He's not a He's not a guy who wants to put his name on a lot of things, and he's not somebody who, you know, wants to create institutions in his image. So, there isn't going to be anything like that. Or at least, it doesn't look like it right now. So, I think he's been a you know, there's a whole generation of people who've grown up, and they've gotten to know Warren either going to the meetings, watching him on CNBC, or just going to the sessions that he he invites these 10 or 12 colleges out there every year, and he talks to them, and he he's really in the teaching business. He may be in the investment business, but he's also in the teaching business. And he shares his advice with all these big executives that go into these companies. When Immelt became head of GE, I would
OtherWhen Immelt became head of GE, I would say the first thing Immelt did was fly to Omaha and talk to Warren. And I think that goes on all the time. And uh Warren gives some great advice. So, from the standpoint of naming a university or a big charity after him, I don't know that anything like that's going to happen. Of course, it's up to the children to some extent, but or maybe Bill Gates, who loves him, absolutely loves him. So, uh but I'm sure some kind of a an important thing may be done.