The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [427]
Yet Buffett showed them a graph indicating that the value of the market was still one-third larger than the economy. That was far higher than the level at which Buffett said he would buy stocks. It was considerably higher than the market had ever stood in modern history—higher, even, than the peak of the Great Bubble of 1929. In fact, the graph suggested that the economy would have to nearly double, or the value of the market would have to fall by nearly half, before he would get really excited about it.16 He told them that despite two years of keelhauling, even with the NASDAQ down by more than half, he would still not buy. He expected the stock market (with dividends included) to grow at no better than about seven percent a year, on average, for possibly as long as the next twenty years.17 That was only about one percent higher than he had said two years before. It was a dispiriting message, most of all to Buffett himself—who was about to celebrate his seventy-first birthday—and to the track record he wanted to maintain.
“That shouldn’t be the way markets work,” he said, “but that is the way markets work. And in the end, that’s what you should remember.” He put up a slide.
ANYTHING THAT
CAN’T GO ON FOREVER
WILL END.
—Herb Stein18
Many in the audience were shocked and sobered—but impressed. “You basically have to listen to Warren,” said Jeff Bezos, CEO of Amazon.com. Amazon was trading at $17, down from $113 at its high. “Some things he said were quite painful, but, by God, the man is a genius and so far seems to be right.”19
Buffett enjoyed congratulations for his speech at lunch under a tent on the deck behind Herbert Allen’s condo, where a group of about a hundred people, including the Grahams, had gathered. He sat with President Vicente Fox of Mexico—whom he thought of as “an old Coca-Cola guy”—and kicked around the economy.20 Then he went off to play golf.
Kay Graham rode over to the bridge room to play cards. After a while she said she was not feeling well and had decided to go back to her room. She called to alert her assistant, whom she had left waiting for her at Herbert Allen’s condo next door to her own, then walked out to her golf cart and drove back to her condo alone.
The assistant had started to check out the window for her every couple of minutes. She looked and saw that Kay’s golf cart had already arrived, but it was empty. She sprinted outside and saw Kay lying at the top of the steps on the porch in front of her door. Running over, she bent and spoke to Graham, who didn’t respond. She started screaming for Herbert Allen to come out.21 By the time the emergency medical technicians arrived a few minutes later, Don Graham had rushed back from the golf course. He was going to need someone to help him make decisions, and asked Buffett whether he wanted to come along. But Buffett could not do it.22 Griffith Harsh, a prominent neurosurgeon who was married to eBay CEO Meg Whitman, went with Don to look at the CAT scan at St. Luke’s hospital in Ketchum, about ten minutes away.23
Photo Insert Four
Image 72
Buffett and Federal Reserve Chairman Alan Greenspan appear at the Greater Omaha Chamber of Commerce, February 20, 2004.
Image 73
“End Zone” Buffett explains the finer points of the game during a charity event for Jean Naté.
Image 74
Warren holds Susie close in July 2004, one of her few public appearances after recovering from oral cancer surgery.
Image 75
Buffett shows his feelings for GEICO at the company’s new Amherst, NY, facility in January 2005.
Image 76
Charlie Munger goes for a read in England.
Image 77
Buffett and former president Bill Clinton at a Girls, Inc. fund-raiser in Omaha, December 2006.
Image 78
Buffett with friend Sharon Osberg.
Image 79
Bill Gates Sr., Bill Jr., and Warren in China, 1998.