Omaha Nebraska is a not the most famous place in the world. But that is for uninitiated, those initiated in the vagaries of the capital markets, are familiar with the place belonging to sage of Omaha, Mr. Warren Buffet. His wealth amounts to 42 Billion dollars making him the second richest man in the world next only to much better known Bill Gates. Mr. Buffet was the brightest student of Benjamin Graham the acknowledged guru of the fund managers. He has proven the trust reposed by his guru by earning the fortune on the Wall Street. Unique thing about his accomplishment is that everybody close to him is rich, including his immediate family, friends and people who trusted him with their money.
A decade or so back Doordarshan used to show an AD of Mahatma Gandhi, with his portraits drawn by merely two lines and the caption read, “The greatness of this man was his simplicity”.
No such AD is displayed as off now on American televisions, but probably sometime in future there would be one.
Mr. Buffets investing strategy is simple and he narrates it ad-nauseum, buying even a single share of a company is like investing in its business, and for that one needs to have the fullest understanding of the business. Don’t invest in business one is unsure off. He never invested in technology, because he could not understand its intricacies. He does not believe in speculation and his theory has stood the test of time.
Wall Street is the beehive of whiz kids, Very smart people managing billions but none of them has the same consistent record of success. Apart of thrill of meeting the second richest man, curiosity for his stupendous success, was the reason, which prompted me to join the Business school trip to meet him in person on 9th of March this year.
We reached his office in the city at 9:15 and were prompted by his secretary to a most ordinary seating room along with students of two other universities. Mr. Buffet arrived at 9:30 and agreed to a two hour question and answers session, He stated his preference for difficult questions. He answered in all ten questions. None of these questions were shattering, they ranged from intelligent (The first question, “Are the great investors born or produced”? to socially relevant (“what does he think of duty of rich nations for the poor nation like Ghana”? and commonsensical (“what is his succession plan”? who would manage his wealth after him? What should be the correct fees paid to Hedge fund managers?) And the last one the simplest of all, but which begot the greatest answer.
Intelligence and wit was displayed a plenty. Displaying his warmth for one of his probable successors Anthony, he promised that in case 78-year-old Mr. Buffet is blessed with a son now, the child would be named Anthony. On succession his comment was that the day after his death, a letter would be mailed to all his shareholders, starting with “Yesterday was a great day for you but a bad one for me”. He narrated the outcome of a wager of a princely sum of five dollars, which he lost to Tiger Woods playing against him. But he succeeded in reclaiming 50 cents as caddie’s fees. He popped open a Coca Cola can, saying that you don’t have to really drink it all you have to do is open it, Berkshire Hathway (BH) his holding company incidentally owns 12% of the Coca Cola. Reverting to Ghana, it was pointed out that total GDP of Ghana might be less than that of his; the prompt answer was “Than we should merge”. He reiterated the fact that he owes his success to being born in the right time at the right place. Bill Gates once told him that had he been born a century earlier he would have been an excellent morsel for bears as he couldn’t run , couldn’t climb trees , and his entire skill lay in allocating capital which would not have impressed the attacking bear much.
But it was not only his wit, but his wisdom, which prompted the greatest answer.
The Q&A was followed by a luncheon at Restaurant owned by him. The food was simple, for veggies it was a plate of boiled pasta topped with boiled vegetables, others enjoyed a piece of steak and boiled potato. Mr. Buffet was all warmth and charm throughout; he ate and answered with relish. He had planned to move to every table but time proved to be a constraint.
Mr. Buffet draws an annual salary of merely USD 100,000 per annum (My room partner a young techie from AP is drawing USD 90,000), has been living in the same five bedroom house for 30 years, does not draw on his wealth in BH at all, the company does not declare any dividends with the result that its each share is worth USD 90,000. The number plates of his car is” Thrifty” and surprisingly he drives it himself. 99.5% of his wealth is slated for charity, equivalent to USD 41.79 billion dollars. He would be remembered in history as one of the great philanthropists.
But he would also be remembered for his wisdom, which was declared in an ultimate answer to the last question. Which was “How do you convince the new generation to have a longer term investing horizon instead of an itch to get rich immediately?” The question wasn’t great but the answer was.
His reply was “We are considerably richer than our previous generations, Our houses are warmer in winter and cooler in summer than they were before, Our automobiles are much more comfortable, and we have the luxury of watching great events right in our living rooms, which a couple of generations ago the richest man could not dream of for want of adequate technology. The most important thing in life is the love, of your friends, and relatives and acquaintances. That should be cherished and should be the goal”
A successful capitalist is the last man one expects to hear these words from, they sound coming more from the realms of religious preachers. Mr. Buffet is amongst the fewest of the few who have made a successful cross over.
I have been planning to ask him a clever question for days together; the itch might be pardoned for being reasonable in an MBA candidate trying to impress the second richest man in the world. But nothing really came off, until in the final movements it divined upon me that he so much resembled our great Mahatma, “whose greatness was his simplicity”. And to my great satisfaction and probably to his, instead of asking a clever question I paid this heartfelt tribute “You sound like Mahatma Gandhi of capitalism.”