The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [167]
In January 1966, another $6.8 million had rolled in from his partners; Buffett found himself with a $44 million partnership and too few cigar butts to light with his cash. Thus, for the first time, he had set aside some money and left it unused—an extraordinary decision.10 Ever since the day he left Columbia Business School, his problem had always been getting his hands on enough money to pump into a seemingly endless supply of investment ideas.
Then, on February 9, 1966, the Dow had briefly streaked across the mythical one thousand mark before closing just a few points below. The chant began: Dow one thousand! Dow one thousand! The market would not break through the barrier again that year, but the euphoria carried on anyway.
Buffett had been worrying all year about disappointing his partners. Although he started his latest letter to them cheerily with the news about the huge profits on American Express—“Our War on Poverty was successful in 1965,” he wrote, alluding to President Johnson’s program to bring about a “Great Society” through a vast array of new social-welfare programs—he then delivered the real news in what would be the first of many similar warnings: “I now feel that we are much closer to the point where increased size may prove disadvantageous.” And with that he announced that he would be shutting the door to the partnership, locking it, and putting away the key.
There would be no more new partners. He made a joke of it. Susie couldn’t have any more kids, he wrote, because they wouldn’t be allowed in. This joke was not particularly apt, since none of their children had ever actually been partners—or would be. He was determined to manage their expectations about money, in order to ensure that they would find their own way in life. From an early age, each of the kids knew not to expect financial help from him except to pay for their education. He could have brought the children into the partnership as a learning exercise—to teach them about money, about investing, and about how he spent his time. Certainly he used it that way with those who were members of the partnership. But Warren rarely—if ever—“taught” those he saw day to day. For him, teaching was a performance, a conscious act that took place before an audience. His kids got no lessons.
Instead, he bought them stock in the benighted Berkshire Hathaway. As trustee of the trust left to his children by his father, he sold the farm that Howard had bought as a refuge for the family and used the money to buy the stock. Given that Warren didn’t approve of unearned wealth—which was how he viewed inheritance—he might have left the farm alone. A small farm in Nebraska would never be worth much, and the kids would never become rich from their grandfather’s inheritance. But by investing the proceeds in his floundering textile business, he increased his hold on Berkshire by another two thousand shares. Why he cared so much about it was a mystery to observers, but ever since Buffetting his way to control of Berkshire, he seemed obsessed by it.
The Buffett kids were not expecting to get rich. They did not even really know that their family was rich.11 Their parents wanted them to be raised unspoiled, and they were. Like children everywhere, they had to do chores to get their allowances. But when it came to money, their family’s odd disconnection meant that Susie and Warren tussled over her allowance as if the Buffetts were broke; then she got the money anyway and used it to give them an upper-middle-class life. The children went on nice vacations, enjoyed themselves at the country club, wore good clothes, and saw their mother’s Cadillac and fur coats. But they never got to take money for granted. Their father niggled over