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“Having heard all the genie stories, I would say, ‘What’s the catch?’ And the genie would answer, ‘There’s only one catch. This is the last car you’re ever going to get in your life. So it’s got to last a lifetime.’

“If that had happened, I would have picked out that car. But, can you imagine, knowing it had to last a lifetime, what I would do with it?

“I would read the manual about five times. I would always keep it garaged. If there was the least little dent or scratch, I’d have it fixed right away because I wouldn’t want it rusting. I would baby that car, because it would have to last a lifetime.

“That’s exactly the position you are in concerning your mind and body. You only get one mind and one body. And it’s got to last a lifetime. Now, it’s very easy to let them ride for many years. But if you don’t take care of that mind and that body, they’ll be a wreck forty years later, just like the car would be.

“It’s what you do right now, today, that determines how your mind and body will operate ten, twenty, and thirty years from now.”

54

Semicolon

Omaha • January–August 2000

Buffett began the first week of the millennium in his office. In its first edition of the year, the Sunday Times of London said, “ignoring technology seems to have made a chimp out of Buffett.”1 One of the first pieces of correspondence was an e-mail from Ron Ferguson, CEO of General Re.

Buffett was already bracing himself. General Re had so far brought him nothing but deplorable news. A year ago, after the company had admitted being duped in the Unicover fraud mere weeks after Berkshire bought it, Ferguson had made a new confession. Movie producers and their lenders had talked General Re into guaranteeing ticket sales on Hollywood films. The company said it would pay if the box office fell short, without knowing what scripts would be filmed or who would star in them. Buffett had been incredulous when he found out. Within weeks, lawsuits began to unreel from the film-finance fiasco faster than the failed films’ credits unfurled. It could have gone without saying that his favorite manager, the brilliant Ajit Jain, would never have guaranteed any dumb movie deals. Although it did get said.

Then Ferguson belabored him into a nitpicking match over how to underwrite an Internet lottery called Grab.com that Ajit was reinsuring. Buffett now realized that Ferguson had a sharply different philosophy from his. Buffett always liked to talk about how he would rather step over one-foot bars than look for seven-foot bars to hurdle. The Grab.com lottery deal offered an easy profit—a one-foot bar to step over.2 Ferguson didn’t want to do it because it was such a layup. General Re, he said, only did deals where it had an underwriting edge.

Buffett roundhoused the match to an end, then decided that he needed a change in management. Yet he did not act, for nothing required him to do so. General Re had a wonderful track record. The business needed mending, not a purge. Firing Ferguson so soon after he bought the company would mean a brouhaha, a public hullabaloo. He hated firing people.

Two months after the Grab.com deal, come the millennium, Ferguson was confessing that General Re had lost another $273 million from bad insurance pricing. It struck Buffett that he could no longer hope these were isolated mistakes, but an infestation; General Re seemed cursed since the day he’d announced he had bought the damn thing. In its first twelve months as part of Berkshire, General Re—formerly a paragon of discipline—had run straight into the ditch and had lost nearly $1.5 billion dollars from underwriting, the pricing and selection of risk. No company that Buffett had ever owned had lost money approaching a fraction of this magnitude. Buffett said little but recognized that he would have to do something soon.

When the news was published, investors rapidly readjusted their thinking once again. Had paying $22 billion for General Re been a mistake? Buffett