The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [132]
Well, I’ve got these partnerships, Buffett explained, and I do this, and this, and that. In 1957, he said, his partnerships had earned over ten percent in a year when the market had declined over eight percent. The next year the partnerships’ investments had risen more than forty percent in value.24 Buffett’s fees so far from managing the partnerships, reinvested, came to $83,085. These fees had mushroomed his initial contribution of only $700—$100 contributed to each of the seven partnerships25—into a stake worth 9.5 percent of the combined value of all the partnerships. Moreover, his performance was well on its way to beating the Dow again in 1959, which would make him richer still and raise his stake again. Meanwhile, his investors were thrilled; new partners kept joining. Charlie listened. Eventually he asked, “Do you think that I could do something like that out in California?” Warren paused for a moment and looked at him. This was an unconventional question coming from a successful Los Angeles lawyer. “Yeah,” he said, “I’m quite sure you could do it.”26 As the luncheon wound its way to an end, the Seemans and the Davises decided it was time to go. When they got on the elevator, their last sight was of Buffett and Munger, still sitting at the table, engrossed.27
A few nights later, the two men took their wives to Johnny’s Café, a red-velvet steak joint, where Munger became so self-intoxicated at one of his own jokes that he slipped out of the booth and began rolling on the floor with laughter. When the Mungers returned to Los Angeles, the conversation continued in installments, the two men talking on the phone for an hour or two with increasing frequency. Buffett, once obsessed with Ping-Pong, had found something far more interesting.
“Why are you paying so much attention to him?” Nancy asked her husband.
“You don’t understand,” said Charlie. “That is no ordinary human being.”28
24
The Locomotive
New York City and Omaha • 1958–1962
Warren and Susie seemed like ordinary people. They kept a low profile. Their house was large but not ostentatious. It had a log cabin in the backyard for the kids. The back door was never locked; neighborhood children wandered in and out. Inside the house, the Buffetts clickety-clacked on their different tracks at gathering speed. As Susie added stop after stop to her local schedule, Warren headed out on a nonstop trip to Dollar Mountain.
Until 1958, his straightforward route was to buy a stock and wait for the cigar butt to light. Then he usually sold the stock, sometimes with regret, to buy another he wanted more, his ambitions limited by his partnerships’ capital.
Now, however, he was managing more than $1 million in seven partnerships plus Buffett & Buffett and his personal money,1 which let him operate on a different scale. His network of business pals like Stanback, Knapp, Brandt, Cowin, Schloss, and Ruane had grown by the addition of Munger; the two of them ran up outrageous—by their standards—phone bills every month. Munger had introduced him to his friend Roy Tolles, a lanky former Marine fighter pilot who wore a constant placid smile and kept the thoughts inside his quick mind to himself—except for the occasional barbed zingers he had a way of throwing out, which made people “want to keep a few Band-Aids around,” as one friend put it. Buffett, like Munger, could parry and riposte with the best, and added Tolles to his collection. This knack for signing up volunteers to his cause had created a large, if loosely organized, support structure. Warren more or less automatically Tom-Sawyered these supporters, hived off into several cells, into helping his interests, which had grown so fast that he could no longer carry out every detail of them by himself.
The days when Warren simply sat in his study at home, picking stocks out of Security Analysis or the Moody’s Manuals, were gone. Increasingly, he began to work on large-scale, lucrative projects