How Warren Buffett Became The Oracle of Omaha
“I measure success by how many people love me.”
— Warren Buffett
May 29, 1969
On an unremarkable day, one that yearned for a glimmer of good news, Doris Buffett sat curled up on a couch in her modest Omaha home. The striking 41-year-old blonde was absentmindedly flipping through catalogs from Borsheims and Nebraska Furniture Mart, a pleasant enough distraction in a life with too many days with too few surprises. Then, out of the corner of her eyes — said to be the color of blue diamonds — she noticed a single unopened letter scattered haphazardly among the remnants of the morning’s mail. The nondescript envelope, as it would turn out, concealed a depth of secrets.
It was a letter from her portfolio manager who also happened to be her beloved brother, affectionately known by the family as Warreny. With the scent of black coffee lingering in the air, mixed with delicate wisps of cigarette smoke, Doris leaned over to pick the envelope up. An enigmatic smile crossed her lips. Within the confines of her unassuming existence in Omaha, the contents held the promise of change. But as she began reading, that first moment turned out to be yet another bittersweet detour in a life all too familiar with trapdoors.
A Star is Torn
Less than a week earlier, 39 year old Warren Edward Buffett sat before a storied desk that once belonged to his Congressman father, found himself at a crossroads. His office was identified was a place where a “Too Hard” file tray on his desk reminded visitors to keep things simple or be ready for a volley of unrelated but quite amusing stories.
His home on Farnam Street, also in Omaha, was more than a place of business; it was a sanctuary of thought where he immersed himself in newspapers, magazines, annual reports, and even historical biographies for as much as six hours per day. he might be reading the IBM 10K one minute and a biography of Napoleon the next. He liked to absorb knowledge across the spectrum, connect the dots, and discover hidden gems for his fund which really meant his small group of friends and family investors. From time to time,, he’d listen to business radio and watch the stock ticker and news channels, but the thing that really interested him was longer term cyclical upheavals. To Buffett, there was noting he loved as much as a good cataclysm now and then.
Still, he often admitted ruefully represented the burden of responsibility for their life’s savings. This weighty obligation was never far from his thoughts, and he spent many years trying to lighten the load without much success until May 29, 1969.
Buffett’s investment education was unconventional, even though he had an MBA from Columbia Business School, where he was mentored by Ben Graham and David Dodd, luminaries of modern security analysis. Their book brought Buffett to the attention of the two world-class investors. Buffett said later, “I had just read Graham’s book, and finding that at age 19 was one of the luckiest moments of my life.”
Their shared investment philosophy wasn’t multitasking but “multi-asking,” diving deep, examining minutiae, and unraveling hidden correlations. Graham the mentor ingrained in Buffett the mate an invaluable mantra: trust nothing blindly, challenge every assumption, and approach so-called Wall Street mavens with a healthy dose of skepticism. Sometimes, the subtlest market tremor in the least expected sectors could reverberate through a portfolio. Graham was convinced that it took a discerning eye like Buffett’s to seize such opportunities, particularly when others sought shelter behind their balance sheets. Realizing Graham was a simpatico soul, Buffett reasoned that if he went to Columbia, he could act as his mentor. Recognizing a kindred spirit in Graham, Buffett decided that by enrolling at Columbia, he would be mentored by the best in the business.
After graduation and an apprenticeship at Graham’s firm, Buffett opened his family partnership, transforming himself over the next few years into a modest millionaire. Managing a small fund in the face of Wall Street’s computers and quantitative experts, however, was a monumental challenge. Buffett needed a business model that could beat the system, even when the system meant everyone else. They were bigger; he needed to be better. They had more iron, he had more metal. They spoke of performance, he deal in customer’s wealth. Still, he was finding it hard to beat the system the way he was going.
Buffett recognized life as a reliable stock picker, no matter how good, wasn’t his true calling. The title of Wall Street tycoon held little attraction. He was cut from a different cloth, however threadbare by comparison. In Omaha, business people were helmsmen, not hustlers, like the international engineering firm Peter Kiewit, run by his friend Walter Scott. These were big, essential enterprises overseen by individuals who lived and thrived doing their daily work. Most of all, they imbued their efforts with unspoken values. At that moment, Buffett chose to transition to Main Street.
But how could he make the shift when people relied on him to grow their investment accounts every quarter?
Time To Go
To pull off this sleight of hand, turning the dross of information into the floss of investing required time. Buffett realized he also needed patient capital. He excelled at the long game, the ‘Rip Van Winkle’ school of investing, where you buy a great stock and let it grow for decades. The key was finding investors who trusted him to do just that. It was a matter of goal alignment. He would find it on his home turf. It meant that Omaha was the secret crossroads where finance and purpose collaborated. It told him he could focus here better than anywhere, and it would lead to the most winning investment thesis in history.
As Alexander Graham Bell once said, “When one door closes, another opens.” Buffett realized his job was to beat the market. He was asking his most loyal investors to choose sides, including his sisters.
His secret to beating the market was, as he called it, the ‘Rip Van Winkle’ school of investing. Buy a great stock and go to sleep for twenty years; when you wake, it‘ll still be growing. Buffett could not — would not — be measured against the fools who traded stocks for milliseconds when he wanted to hold stock for decades. It was just a matter of probabilities.
The key was people who placed their trust in you. That would give him time to make the thesis work. He would find them on his home turf. Then, he would find others. Then, he would find capital. The program would compound like bank interest. But there were powerful naysayers. Wall Street warned him they’d do everything to stand in his way. It didn’t matter to Buffett. On May 29, 1969, he sent the letter.
“That was Warreny for you,” Doris quipped.
Easy Street
Warren Edward Buffett, a 39-year-old with a storied desk that once belonged to his father in a tidy home office, found himself at a crossroads. His office was identified as a place where a “Too Hard” file tray on his desk reminded him to keep things simple or be ready for unintended diversions.
His home on Farnam Street was more than just a place of business; it was a sanctuary of thought where he immersed himself in newspapers, magazines, annual reports, and even historical biographies for as much as six hours per day. Here, he absorbed knowledge across the spectrum, connected the dots, and discovered hidden values for the funds of friends and family, all the while remaining connected to the financial world through tickers and news channels.
Still, he often admitted ruefully represented the burden of responsibility for their life’s savings. This weighty obligation was never far from his thoughts, and he spent many years trying to lighten the load without much success until May 29, 1969.
Buffett’s investment education was unconventional, even though he had an MBA from Columbia Business School, where he was mentored by Ben Graham and David Dodd, luminaries of modern security analysis. Their book brought Buffett to the attention of the two world-class investors. Buffett said later, “I had just read Graham’s book, and finding that at age 19 was one of the luckiest moments of my life.”
Their investment philosophy wasn’t about multitasking but “multi-asking.” Scrutinize every detail, and seek connections. They taught him to question everything. A mere market blip in the most unexpected places could be linked to a portfolio. If he went to Columbia, he could convince Graham to be his mentor.
After graduation, he opened a partnership, transforming himself into a modest millionaire by the standards of the time. Managing a small fund in the face of Wall Street’s computers and quantitative experts, however, was a monumental challenge. Buffett needed a business model that could beat the system, even when the system meant everyone else. They were bigger; he needed to be better. They had more iron, he had more metal. They spoke of performance, he deal in customer’s wealth. Still, he was finding it hard to beat the system the way he was going.
Buffett recognized life as a reliable stock picker, no matter how good, wasn’t his true calling. The title of Wall Street tycoon held little attraction. He was cut from a different cloth, however threadbare by comparison. In Omaha, business people were helmsmen, not hustlers, like the international engineering firm Peter Kiewit, run by his friend Walter Scott. These were big, essential enterprises overseen by individuals who lived and thrived doing their daily work. Most of all, they imbued their efforts with unspoken values. At that moment, Buffett chose to transition to Main Street.
But how could he make the shift when people relied on him to grow their investment accounts every quarter?
To pull off this sleight of hand, turning the dross of information into the floss of investing required time. Buffett realized he also needed patient capital. He excelled at the long game, the ‘Rip Van Winkle’ school of investing, where you buy a great stock and let it grow for decades. The key was finding investors who trusted him to do just that. It was a matter of goal alignment. He would find it on his home turf. It meant that Omaha was the secret crossroads where finance and purpose collaborated. It told him he could focus here better than anywhere, and it would lead to the most winning investment thesis in history.
As Alexander Graham Bell once said, “When one door closes, another opens.” Buffett realized his job was to beat the market. He was asking his most loyal investors to choose sides, including his sisters.
His secret to beating the market was, as he called it, the ‘Rip Van Winkle’ school of investing. Buy a great stock and go to sleep for twenty years; when you wake, it‘ll still be growing. Buffett could not — would not — be measured against the fools who traded stocks for milliseconds when he wanted to hold stock for decades. It was just a matter of probabilities.
The key was people who placed their trust in you. That would give him time to make the thesis work. He would find them on his home turf. Then, he would find others. Then, he would find capital. The program would compound like bank interest. But there were powerful naysayers. Wall Street warned him they’d do everything to stand in his way.
It was May 29, 1969. He sent the letter.
“That was Warreny for you,” Doris would quip.
Sibling Rivalry
Doris was the oldest sibling in the Buffett family. She had been recently divorced, the second of four marriages ending up lemming-like, diving off a steep cliff onto the rocks. Still, she took her problems in stride. When asked what went wrong, Doris concluded, “My husband didn’t have a sense of humor.”
Her charmed life was less than it should have been, given her beauty and intelligence. Every marriage proposal held the secret to eternal bliss until it didn’t. In addition to men problems, she suffered two bouts of cancer and had to declare bankruptcy in 1987 after being taken by swindlers. She later said the experience caused her to “lose every shred of self-respect.” Yet a can-do Omaha spirit transformed her travails into a happy sainthood.
Doris also had a way of snubbing the high-stepping strutters who claim to have the answers by centering her heart around two loves. Nebraska politics and charity to those in need — making small personal donations to educate prison inmates, battered women, and low-income teenagers. Politically, she organized anti-communist women’s groups, and in 1964, she was named a Nebraska alternate to the Republican National Convention.
Doris was also known for an incredible sense of humor, telling pointed but funny stories that often skewered her subject. For example, she was fond of saying she refused to fund “S.O.B.s,” which stood for the “Symphony, Opera and Ballet.” She could level a trenchant if biting dig now and then at her dear little brother when the moment required, as it did now.
In her best theatrical baritone, Doris began reading Buffett’s partnership letter aloud to her sister Bertie across the table, “To “My partners.” Then, with a playful toss of her blonde tresses, she exchanged a knowing glance, “by which he means his two sisters.” It was an update on the Buffett Partnership Ltd. performance, also known as BPL, the humble predecessor to Berkshire Hathaway.
Warren Edward Buffett was not an average brother. He was not an average broker. He was not average anything. When Doris and Warren were given intelligence tests, she scored only two points below him. Asked how that made her feel, she replied: “Warren got a lot out of those two points,” was her response.
Warren Buffett was different from the moment you met him as he was the moment he was born. Doris and Bertie understood this. From when he was six years old, selling gum and Coke to his neighbors, they also knew that he would never stop until he was the wealthiest man in the world. It was ironic because he didn’t care about money, not in the ordinary way. Something else was driving this plan.
Bertie, the youngest of the siblings, was quietly listening as Doris continued to read the letter: ‘As long as I am on stage and assuming responsibility for the management of virtually 100% of the net worth of many partners, I will never be able to put sustained effort into any other activity.’
Two years ago, when he sounded the “I’m retiring alarm bell,” the two sisters assumed it was an idle threat. At the time, he said he wanted to focus on other interests. ‘He has no other interest than investing,’ which for the sake of his marriage would turn out to be unfortunately prophetic.
The writer’s unmistakable message was buried within the twists and turns of the letter’s investment jargon: “In 1967, I expressed a desire to be relieved of the necessity of focusing 100% on our investment partnership. I have flunked this test completely.” Now, it looked like their future was about to take a turn. But Doris had a peculiar feeling.
It’s his mind. That’s the problem,” Bertie said out loud, “he‘s always overthinking. He’s too smart for his own good,” as she blew a cooling breath on a steamy cup of coffee.
With elbows perched and a napkin holder acting as her gavel, Doris said, “He’s talking about the damned stock market. Every day, you start over again. I think he’s tired of the hustle.” It turned out that all Buffett wanted to do in his early life was make a killing, and he was damned good at it. But now it was killing him.
The thesis, which was slowly emerging, was that of a portfolio manager transforming into an entrepreneur, a magic act if there ever was one, as Buffett had laid out in a previous letter. His goal in life was to make: “An investment in a controlled business where I liked the people and the nature of the business even though alternative investments might offer a higher rate of return. Thus, I am likely to limit myself to things that are reasonably easy, safe, profitable, and pleasant.”
Bertie considered this. “What does easy and pleasant have to do with it?” She added, “He’s a stockbroker for Chrissake. What did he think life was going to be like?”
“It gets better,” Doris said and started reading again, “He writes, ‘I can’t help being competitive. I know I don’t want to be totally occupied with out-pacing an investment rabbit all my life. The only way to slow down is to stop.’”
“What the heck does that even mean?” Bertie asked. It meant finding the right business and figuring out how to run it from Omaha.
Doris gave her famous raised eyebrow look, “Bertie, it means he’s quitting.”
The reality would come to light later. Buffett wasn’t quitting.
He was changing the game.
Ethos and Egg McMuffins
“I would find a long commute quite irritating even if I did it under favorable circumstances — even if I had a driver,” Buffett said. “I like being in the home and I like being in the office, and I’m not keen on in between.”
Warren Edward Buffett fell in love in 1949 with a girl whose boyfriend played the ukulele. Buffett goes out and buys a ukulele. The music store owner probably had one of them in stock for years and Buffett cleans him out.
The girlfriend vanished (we wonder what she would say today) but the Ukulele remained. Now he plays it at shareholder meetings. The second takeaway was that he developed a love for music, which became a part of his courtship strategy for his future wife, Susan Thompson. He always has a plan B.
That’s the haiku version of the Buffett mystique, one part innocent if often disappointed romantic who tilts at windmills; the other a crafty gambler who knows when to hold and when to fold. It is what makes him a sharp businessman and a generous philanthropist, a kindly avuncular figure to most, but a righteous biblical patriarch to the few who cross ethical boundaries.
Buffett’s investment philosophy is based on value investing, which focuses on simple and understandable business models, competitive advantages, strong management teams, high returns on equity, and low levels of debt. But what it means to the Oracle of Omaha is investing under the guidance of a set of profound values.
As a result, there have been periods, often long and dreary, in which his philosophy falls out of favor and he suffers the slings and arrows of outrageous journalists. Then in the next phase, his boat veers towards shore once again, and he’s proven right. There are never any apologies from the angry chorus but one suspects he smiles as the billions are entered on the big scoreboard.
“My only measure of success is how many people love me.”
Values Cigar Butts
So what makes Warren run? It isn’t cars (he drives a 10-year-old Chevy Suburban) and still lives in the house he bought 60 years ago. It turns out they key to joy is a little machine where he can train his laser-sharp instincts on how to create value from a one-time bankrupt company. the corporate charter calls it Berkshire Hathaway, one time a textile manufacturer that he transformed into a diversified holding company, with interests in a wide range of industries.
He leads a simple, Omaha life, resides in the same house he bought in 1958 and spends 12 hours a week playing bridge, and reads for five hours each day. Buffett only recently upgraded to an iPhone. He gets great pleasure out of music, bridge, Nebraska football, and McDonald’s Egg McMuffins. When asked why he doesn’t eat at a nice restaurant instead, he replies, “It wouldn’t make me happier.”
Again, we asked the question, what makes him happy?
If you go back in time, you’ll learn Buffett started his private partnership in 1956, which eventually grew to have seven limited partners, including his sister. Over time, the partnership achieved outstanding investment returns, with an average annual return of 29.5% between 1956 and 1968. In 1962, he began buying shares of Berkshire Hathaway, which he believed was undervalued. Despite his efforts, the company continued to struggle, and by 1965, Buffett had accumulated a controlling stake. In 1967, Buffett made the decision to liquidate the Buffett Partnership and invested the proceeds in Berkshire Hathaway. He continued to acquire shares of the company, eventually becoming the majority shareholder and taking over as chairman of the board in 1970.
None of this was planned.
Driven by this philosophy, our research set out to illuminate the profound influence of place — home, neighborhood, college, or workplace — on sustaining and empowering our subjects during later challenges.
Swimming Upstream
Unless you understand how Buffett sees the world, he may seem both shockingly brazen and astonishingly fortunate. The approach to life and investing, and they are closely intertwined, has made him the most successful private investor in history if you exclude Peter Minuit’s deal on behalf of the Dutch West India Company.
At that time, on May 24, 1626, the Dutch colonist, according to the Library of Congress, purchased Manhattan Island from the Algonquin Indians for the equivalent of $24. Under Minuet’s direction, the land became the principal settlement of what was called New Netherland until the British seized the territory in 1664. They divided it into the colonies of New York and New Jersey, naming one of them in honor of England’s Duke of York, a title currently held by Prince Andrew, the younger brother of Charles III, about which we shall say very little.
While we could argue that Warren Buffett may be the American equivalent of English royalty, it is his investing sense that is astonishingly like a Dutch trader.
The Omaholic
A word whispered throughout the Midwest since the mid 1700s, first by a famous Native Indian tribe, then later famously crops up in history books and war stories, and finally echoed on the football field line of scrimmage is none other than the home and heart of the legendary investor.
That word? Omaha. What is uncanny is that the usage of the city name could have been part of a Hollywood script introducing its most famous resident.
The original meaning is taken from the ancient Siouan language spoken by the Omaha (Umoⁿhoⁿ) people, whose tribe began migrating west in the 17th century. After other tribes began moving into their area, the Omaha tribe responded by reaching the Mississippi River where half of them decided to go upstream. This group became known as the Omaha, a word that means “going against the current.”
For many, the word Omaha refers to a famous Normandy Beach, one of the two American landing zones named by General Omar Bradley, another Midesterner. But why Omaha? Thanks to a corps private — from Omaha, Nebraska (the other private was from Utah). Bradley was known for a modest demeanor and the care of his troops, earning him the nickname “the GI’s General,” The naming credit goes to General Omar Bradley, a native of the Midwest who chose the name ‘Omaha’ for two privates, one of whom hailed from Omaha, Nebraska. Bradley’s considerateness earned him the affection of his troops who gave him the moniker “the GI’s General,” a kind of public popularity we very much associate with Warren Buffett
Zooming into the 90s, at the Indianapolis Colts Stadium, quarterback Peyton Manning shouted “Omaha” at the line of scrimmage, indicating a shift in strategy. Manning later clarified, “Omaha was a trigger word that meant we had changed the play, there was low time on the clock and the ball needed to be snapped right now.” As Manning suggested, when everything is topsy turvy and time is precious, agility in decision-making is an Omaha. Buffett would agree
If you examine the full meaning of Omaha, Buffett’s legendary bravery in the face of brutal market shifts, the ability to react to unforeseen changes, and a disarming tendency to fight the trend, reveals the soul of a contrarian or a genuine Omahan.
Backstory
You may visit Omaha 100 times, but it won’t be your terroir if you weren’t born there. You may enjoy the local cuisine and make many nice friends, but you’ll always be outside the jurisdiction that Warren Buffett and many of his friends inhabit. That’s because there are different kinds of terroirs, and some of them have different admission requirements. There are terroirs you must be born in, those you must apply for and some you land in by accident. All of them serve the same purpose, to liberate ourselves from the past and engage with our talents to do things that are greater than ew imagined. Whether you are Buffett or Matisse, they can crop up at any time in our life.
Just like Ed Lorenz’s butterfly, Omaha was a little blip on the radar. It set off a domino effect that turned an ordinary life into something extraordinary. The twist was that we couldn’t put our finger on the how, let alone the when or the why. There was this big bang in a minor galaxy, that much was clear. But for a guy who spent his childhood collecting bottle caps and betting on long shots at the track, he sure turned a humdrum existence into everlasting glory fortune, and fame.
But trying to get into the unconscious mind of someone like Buffett was about as likely as solving world hunger with an herbal tea remedy. Like Lorenz, what we needed now was a jolt of strong Joe to snap us out of our chamomile haze.
Though it may not have been clear when he first came on the scene, it later became apparent that Buffett’s celebrity identity had mysteriously aligned with Omaha, perhaps the least celebrated city in America. We needed to dig deeper to find out why this pairing took place and the search began with a look at how he came to own Berkshire Hathaway. In the minds of most, they are inseparable. But at one time, they were very much apart, twelve cents to be exact. That it led to the creation of the world’s most successful transaction and built an astonishing conglomerate had something, once again, to do with Omaha values.
An 800 Billion Dollar Misunderstanding
“So I went out and started buying the stock, and got control of Berkshire Hathaway, and fired the CEO.”
The letter began, “Dear Warren.”
And that was about where the courtesies ended.
The usually cheerful expression transformed almost instantly. A sense of keen disappointment was visible, and soon, the sturdy jawline started to quiver, always a sign of unease. Then the clasping of an elbow, followed by both elbows. Warren Buffett, who could be heard humming “Hi ho, hi ho, it’s off to work I go,” on a typical day, was now consumed by the letter’s contents, and a wave of profound disillusionment set in.
A look of resignation, worse than that of a child dropping an ice cream cone, settled across the handsome features. The letter was dated May 6, 1964, and he slowly placed it into his outbox. As he would ruefully admit, “I had expected the letter; I was surprised by the price.”
Buffett perched his reading glasses atop a fine brow, then shot a piercing gaze at the signature. It was from a textile mill CEO who had no idea he would soon banished from his kingdom known as Berkshire Hathaway. It was an unforgivable indiscretion to a man who prized discretion in business affairs. To outmaneuver Buffett was folly. To try to hoodwink him was absolute madness.
Long before he was destined to become the world’s most admired investor philanthropist, Buffett put his faith in people without qualms until a con artist, a boardroom grifter, a guy from the right side of the street born in the first class seats did him wrong. He lied for twelve cents a share. That would not play in Omaha, not by a long shot, and especially not in business with Buffett.
In a chat with CNBC, Buffett later confessed, “The dumbest thing I ever did was — drum roll here — Berkshire Hathaway. It was early in — 1962, and I was running a small partnership, about seven million. They’d call it a hedge fund now. And here was this cheap stock — in a textile company going downhill for years. So it was a huge company originally, and they kept closing one mill after another. And every time they would close a mill, they would — take the proceeds and they would buy in their stock.
So I started buying the stock. And in 1964, I went back and visited the CEO, Seabury Stanton. And he looked at me and he said, ‘Mr. Buffett. We’ve just sold some mills. We got some excess money. We’re going to have a tender offer. And at what price will you tender your stock?’
And I said, ‘11.50.’ And he said, ‘Do you promise me that you’ll tender at 11.50?’ And I said, ‘Mr. Stanton, you have my word that if you do it here in the near future, I will sell my stock to — at 11.50.’
I went back to Omaha. And a few weeks later, I opened the mail — and here it is, a tender offer from Berkshire Hathaway from 1964. And if you look carefully, you’ll see the price is 11 and three-eighths. He chiseled me for an eighth. And if that letter had come through with 11 and a half, I would have tendered my stock. But this made me mad. So I went out and started buying the stock, got control of the company, and fired Mr. Stanton.
And we went on from there.
There is a trophy room filled with hucksters who tried to slip one past Warren Buffett at the betting parlor called the stock market. It has always been a fool’s sport for the overly confident and boastful. But Buffett isn’t just any kind of financier. He is Omaha-bred and bound. That means when he wants to, he can be cornhusker tough. If you are an honest broker, he goes to any length to make things work, but if you do him dirty as Stanton did, it will be to your everlasting regret and he will be ruthless as he later said on occasion. He was, in fact.
No two men were more unalike than Buffett and Mr. Seabury Stanton. Buffett was a University of Nebraska grad, a Harvard reject, and Stanton was a Harvard legacy. Buffett was 100% pure Omaha beef, and Stanton’s ancestors were Yankee whaling captains. It was how he started his career at the top, as treasurer of the Hathaway Company, which merged with Berkshire Fine Spinning in 1955, becoming the largest textile mill in New England.
In 1962, Buffett began buying company shares after noticing that the stock price shot up whenever the company closed a mill. By 1964, Buffett acknowledged that the textile business was waning and the company was not going to improve, and he decided he’d had enough fun and would like to sell his shares.
Stanton made a verbal tender offer of $11 & 1⁄2 per share for the company. Buffett agreed. A few weeks later, Buffett received the tender offer in writing, but it was for only $11 & 3⁄8. Buffett later admitted that this made him rather angry. Then came the pivot of a lifetime of pivots.
Buffett had a choice, or most investors would have considered it an option. But rather than take a loss and dump the stock at a lower price than agreed, the young fund manager began to buy up a controlling interest. Buffett gained control when Stanton’s sibling rallied a group of investors and sold out to Buffett at a meeting at New Bedford’s prestigious Wamsutta Club. Call it regicide by fratricide. The next move was to take over the board and fire the CEO. As he would later admit, it was a startling act of psychological revenge — and financial foolishness — except that it worked out beyond his wildest dreams.
By 1969, an insurance franchise had been added, and his former private fund miraculously turned into a public holding company with thousands of shareholders. The track record is among the best if not the best, investment history.
An initial investment of $100 would be valued today at a staggering $4 million, and the total market value as of this writing is over $800 billion, a three-iron away from one trillion dollars.
But as Buffett also learned, according to German Field Marshal Von Moltke, “no battle plan ever survives the first encounter with the enemy.” Berkshire was never going to be an easy fix. There would be problems, some monumental and some dangerous to his well-being. He was going to have to make some hard choices. People would be disappointed. Some would be shocked and feel let down.
But one thing was for sure. Owning Berkshire Hathaway made Buffett very happy, and now that he was happy again, everyone was about to make a whole lot of money.
