The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [248]
Munger could not resist this encouragement to show off. He had been corresponding with Graham, and wrote to her, “You are taking me back thirty years or more and making me behave like Tom Sawyer with Becky Thatcher, and I figure that Warren is silly enough for both of us.”3
But however giddily she might be making Warren behave, he was also taking Kay to business school in a serious way. “Kay had had me trying to explain accounting to her on the side. I’d bring these annual reports to Washington. And she’d say, ‘Oh, Warren, lessons.’ There I was, teaching again.” He considered her son Don “unbelievably smart,” with “as close to a photographic memory as anyone I’ve ever run into.” As a sign of reassurance to the family, Warren had signed the voting proxy on his shares over to Don. He now stayed at Kay’s house when he came to Washington for monthly board meetings. She didn’t approve of the way he dressed, but “I told her, ‘I’ll dress as well as Don dresses,’” Buffett says. “He and I had a sort of united front.”
Buffett felt that Kay was “very, very smart, and in many ways wise, as long as you didn’t go into those areas where the wounds were. But she understood people well.” As they grew more intimate, he felt he could say something to her about the way she presented herself to her board. He knew she was less needy than she herself realized. One day he took her aside and said, “You can’t plead for help anymore from the board. It’s just not the position you want to be in.” And so, he says, she quit.
The business and personal ties between the Grahams and Buffett had become close enough that Warren invited Katharine and Don to join the Graham Group at their 1975 meeting, at Hilton Head. Don made an immediate impression with his unpretentious manner, while raising its already high average IQ. Many people quickly saw beneath Kay’s brittle, patrician veneer to the vulnerability and humility that had endeared her to Warren. Thus she fit easily with most of the group despite her queenly presence, worldliness, and connections. She made a sincere effort to get along with everyone—although her deep belief that men were far superior to women wasn’t lost on the women at the meeting. The beautifully dressed, perfectly coiffed Graham, an icon among them, would slide casually into a chair amid the men with a cocktail in her hand; somebody would utter a political opinion, and she would respond “Henry thinks thus-and-so”—speaking of Kissinger. It was impossible not to be impressed.
Susie Buffett sang for the group for the first time at Hilton Head. Bill Ruane brought a chart showing the price of gold, which for five years had surged past Berkshire Hathaway’s. He asked, the others thought jokingly, whether he should be buying metal. It would turn out that he had, in fact, been buying gold coins, and made a nice bit of money on it.4
Henry Brandt pulled Buffett into a separate room and asked him to promise that Berkshire stock wouldn’t drop below $40. By October 1975, the stock had been cut in half after trading at $93 just two years before. “Look, I love you,” Buffett recalls saying, “but I can’t promise you that.” “The world is ending,” said Brandt, or words to that effect. “I’ve got every dollar I own in this stock.”
The world continued to end. Even though the rest of the stock market was recovering, Berkshire was not. Brandt panicked and called Buffett, who offered him $40 a share. Then Brandt called Walter Schloss and said, “Warren will pay me forty dollars and I want fifty. What should I do?”
Schloss was the last champion of cigar butts. At the Graham Group meetings, the others razzed him about his “buggy-whip” portfolio of bankrupt steel companies and destitute auto-parts makers. “So what,” said Schloss. “I don’t like stress and I sleep well at night.” He filled out the simple checklists, applying Graham’s philosophy in its purest form. He went home from his desk in the closet at Tweedy, Browne at