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note. Guerin had bought the trading part of Wheeler’s partnership when Wheeler had spun it off and gone into business with Munger. A rough-and-tumble guy who was scrambling like mad to better himself, Guerin had grown up with a “divorced father,” says Munger, “and his mother was a drunk, so he raised himself on the streets. He was high IQ, rebellious, and maladjusted.”20 After a stint in the Air Force, Guerin had worked as a salesman for IBM, then became a stockbroker at a couple of small firms that peddled third-class stocks because they carried the highest profit, or “spread,” for the firm. This was a part of stockbroking Buffett had detested; Guerin, too, found it a relief to escape life as a “prescriptionist.”

By the time Munger met him, the lean, handsome Guerin had learned to roll his crisp shirt cuff down over his tanned forearm to cover his tattoo. He seemed to have a great number of friends as well as a tinge of Hollywood in his blood; one day he brought his friend, the actor Charlton Heston, down to the exchange for a tour.21 He did the trading for Wheeler, Munger, and says he immediately recognized that Munger had a money mind and began to cultivate him. He came to the conclusion that he’d been on the wrong side of the Wheeler deal right away, and began to emulate Munger and Buffett, with the goal of forming his own investing partnership.

“With some, the idea of buying dollar bills for forty cents takes, and with some it doesn’t take. It’s like an inoculation. It’s extraordinary to me. If it doesn’t grab them right away, I find that you can talk to them for years and show them records—you can do everything—and it just doesn’t make any difference. I’ve never seen anyone who became a convert over a ten-year period with this approach. It’s always instant recognition or nothing. Whatever it is, I’ve never understood it. But with a fellow like Rick Guerin—no business background in terms of studying it, but he saw it like that, he understood what it’s about, and he was applying it five minutes later. And Rick was smart enough to know that you should get a great teacher, which is what I was lucky enough to do with Ben Graham.”

As the day progressed at the Pacific Coast Stock Exchange, Munger would sit, lost in thought, usually reading. “Charlie! Charlie!” Ed Anderson would shout from the next desk. Munger would say nothing, or grunt something in response.22 Eventually, Anderson learned to make Munger respond clearly to questions, erasing ambiguity; a simple grunt was not sufficient. But it took time and experience for most people to figure out that Munger’s mind and mouth often went their separate ways.

Guerin did not know this yet. One day he came into the office from his booth on the floor. “Charlie,” he said. “I’ve just been offered fifty thousand shares of XYZ at fifteen dollars. This looks like a good deal.”

“Hmmm, uhm,” said Munger.

“Look, Charlie,” Guerin carried on, “if this interests you, I’m going to buy it.”

“Yeah, yeah,” said Munger.

A little later, Guerin walked back into the office and said, “Charlie, we got them.”

“Got what?” said Munger.

“We bought the fifty thousand shares at fifteen dollars.” Big money.

“What!?” screamed Munger. “What are you talking about! I don’t want ’em! Sell ’em! Get rid of ’em right now!”

Guerin tried to explain. He called on Anderson for backup: “Ed, did you hear this when I said it earlier?”

“Charlie, I was sitting here listening to it, just as Rick said,” Anderson interjected.

“I don’t care! I don’t care! Sell ’em! Sell ’em! Sell ’em!” yelled Munger.

Guerin ran out the door and got rid of the shares. “That was an object lesson,” says Anderson.23

Munger bought cigar butts, did arbitrage, even acquired small businesses—much of this in Buffett’s style—but he seemed to be heading in a slightly different direction than Buffett. Periodically, he said to Ed Anderson, “I just like the great businesses.” He told Anderson to write up companies like Allergan, the contact-lens-solution maker. Anderson misunderstood and wrote a Grahamian report emphasizing the company’s