The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [420]
Yet, even under siege to his reputation, this time, Buffett never fought back. He neither wrote editorials, nor testified before Congress about the dangers of the market, nor dueled in the press, nor gave television interviews to defend himself, nor arranged that his proxies do so on his behalf. He and Munger carried on their regular dialogue with Berkshire’s shareholders, saying that while the market was overvalued, they could not predict how long it would last. Finally, not for the record but as a warning and a way of teaching, Buffett explained his views once and for all and predicted that the market would fall far short of investors’ hopes for two decades in a tour de force of a speech to the elite at Sun Valley that he shortly afterward turned into a Fortune article for Joe and Jane Investor on the street.
It had taken one great surge of courage to burst past his fears and beg for help from Nick Brady to save Salomon. But to show such restraint, then commit himself to such a forecast in the face of years of criticism and ridicule, took a different kind of courage, making the Internet bubble one of the greatest personal challenges of his career.
On March 11, twenty-four hours after the Wall Street Journal said thank goodness the retired AT&T employee was a better investor than Warren Buffett, Berkshire Hathaway issued its annual report, and Buffett graded himself a “D” for failing to invest Berkshire’s capital. He did not say, however, that he considered avoiding technology stocks to have been a mistake. He simply reframed investors’ expectations, writing that, because of its enormous size, Berkshire was now likely to grow in value only “modestly” better than the market. This, he knew, would set off debates about what “modestly” meant. But he felt it had to be said.
Separately, Buffett announced that BRK was so cheap that Berkshire would now entertain offers from investors to buy its own stock. To do so—to give money back to shareholders to whom he hadn’t paid a dividend in decades; to even contemplate it—was as if Buffett, a glutton for capital all his life, had suddenly turned ascetic.
And for the second time, Buffett was publicly announcing what he wanted to buy in advance. Not since the Great Unwinding of the partnership in 1970 had he said, “I will buy Berkshire Hathaway.” Once again, investors had to ask themselves which side to play. This time, many people understood the message. His willingness to put up money for Berkshire stock made such a statement that, before he could buy a single share, BRK rose twenty-four percent.
The following week, the NASDAQ, full of technology stocks, sent up a warning plume of ash.11 By late April, it had cratered thirty-one percent, among the largest losses in historic terms.
By Easter, Buffett did not care; he was doubled over in pain. He could not believe it. Right before his all-important shareholder meeting, the critical performance of his year, the rumors about his health had come true. Susie Jr. rushed him to the hospital at three o’clock in the morning, where he spent the next several days trying to pass a kidney stone. The nurses kept wandering in and out, addressing him as Bill. Although he was in such agony that he never asked, he wondered what the hell was going on. He phoned Big Susie repeatedly in panic. She was away in Grand Lake, Colorado, with her group of “hen” friends from high school; there was nothing she could do.12 Finally, he felt somewhat better, so his doctor sent him home. When his daughter picked him up, she explained that the nurses had been calling him “Bill” because he’d been registered under Doc Thompson’s name.
Almost immediately, however, Buffett had to rush back to the hospital, still trying to pass the damn kidney stone. Once again he sat up all night drinking tumblers of water until, finally, the water torture worked. But from then on he had to worry about a part of his anatomy that had not