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By Root 3157 0

the gathering approval of a public gaze. The method was the same: estimate an investment’s intrinsic value, handicap its risk, buy using margin of safety, concentrate, stay in the circle of competence, let it roll as compounding did the work. Anyone could understand these simple ideas, but few could execute them. Even though Buffett made the process look effortless, the technique and discipline underlying it actually did involve an enormous amount of work for him and his employees. As his business empire had expanded from coast to coast, from the shores of Lake Erie to the suburbs of Los Angeles, Kiewit Plaza remained at the center—a quiet but endlessly busy temple of commerce, furnished with dinged, scuffed steel-frame furniture and linoleum floors. With every new investment, there was more to do; but the number of people at headquarters barely changed. Buffett still remained behind closed doors, guarded by Gladys. The very rich Bill Scott now worked part-time and spent the rest of his days playing with his polka band. A new manager, Mike Goldberg, now augmented the headquarters staff. Verne McKenzie managed the finances. The employees rarely left their tiny offices except for the occasional conclave in the conference room, which seated only four people. No chats took place around the watercooler. As for a period of ease following the scuffle at the Buffalo Evening News, McKenzie put it this way: “There was never such a time.”3 Those who tested Rickershauser’s Law of Thermodynamics found that the sun was indeed nice and warm, but Buffett was so focused and his mind worked at such speed that extended conversations with him left them sunburned. “My mind was so tired,” said one friend. “I had to recuperate from seeing him,” said another. “It was like being pounded on the head all day long,” said a onetime employee.

Buffett had the energy and enthusiasm of a restless teenager; he seemed to remember every fact and figure he had ever read; he finagled people into volunteering for tough jobs, then assumed they could accomplish miracles; and while remarkably tolerant of others’ quirks and flaws, was less so of quirks and flaws that cost him money. So eager for results was he, so confident of others’ skills, so unaware of how far short of his own they fell, that he chronically underestimated people’s workloads. Buffett, the sun around whom everyone revolved, was impervious to the effects of Rickershauser’s Law of Thermodynamics himself.

“People tell me I put pressure on them. I never intend to. Some people like to apply pressure. I never do. It’s actually the last thing I like to do. I don’t think I’m ever doing it, but I’ve had enough people tell me that I do it that it must be true.”

The managers out in the hinterlands who ran the businesses that Berkshire and Blue Chip owned were lucky because Buffett largely left them alone, his trick of management being to find obsessed perfectionists like himself who worked incessantly; then ignore them except for a “Carnegizing”—attention, admiration, and Dale Carnegie’s other techniques—every now and then. Most would not have had it any other way.

The decisions Buffett had made about stocks in the 1970s were defiant bets against pessimism in the great bear market, plagued by rampant unemployment and consumer prices that rose at an intolerable fifteen percent a year. Now that bet suddenly paid off, thanks to a desperate President Carter, who had appointed a new Federal Reserve Chairman, Paul Volcker, in 1979. Volcker ratcheted up the central bank discount rate to fourteen percent to get inflation under control. In 1981, new President Ronald Reagan began to cut taxes sharply, started deregulating business—and supported Volcker despite the howls of pain his policies were causing. The economy and markets had been going through a seizure for two and a half years. Then, in late 1982, the bull market of the 1980s began its stampede as the prices of stocks started catching up with the growth in corporate earnings.4

Much of the money used for Buffett’s late seventies spending spree came from