After six decades of pearly wisdom and investment gems, the news from Omaha hit like a thunderbolt.
As a fellow shareholder emailed me after Warren Buffett announced on Saturday that he would retire at the end of the year as chief executive of Berkshire Hathaway, “Even though we knew it was inevitable, Warren’s announcement today came as a shock to the system.”
In an age of insecurity, Mr. Buffett was an anchor of endurance. Since he took the helm of Berkshire — on May 10, 1965 — General Motors, then the largest American corporation, has greeted 11 new chief executives. Sears, Roebuck, the biggest retailer, has vanished from the scene. Eleven U.S. presidents have come and gone (two of them having survived impeachment and one forced to resign), and Coca-Cola changed its formula, but Mr. Buffett didn’t change his.
And it wasn’t just constancy. Berkshire’s stock that day in May closed at $18 a share. When he delivered the news, it was above $809,000 — almost 45,000 times as high. Over the same span, the Dow Jones industrial average is up just under 45 times.
For the uninitiated, that means his performance was, literally, a thousand times that of the blue-chip American index. Mr. Buffett was the best investor ever — no second choices. But as I wrote 30 years ago in a biography of him, “The numbers alone do not account for the aura.” Since his performance reflects his many decades of managing Berkshire’s investments, he is also among the greatest corporate leaders.
It was not just the math (Elon Musk is richer) but also the quality of his performance. To paraphrase the famous testimony of J.P. Morgan Sr., with whom Mr. Buffett is often compared, it was his character.
Mr. Buffett has long stood out on Wall Street because he eschewed its frequent chicanery, self-dealing and greed (and the double talk that went with it). He revered the institutions of capitalism; most especially, he treated the executive’s duty to shareholders as a sacred trust.
Lest he be accused of violating that trust, he capped his annual salary at $100,000. He never took a stock option (the unholy tool by which chief executives expropriate a piece of the business from the shareholders for whom they are fiduciaries). In corporate America, that made him all but unique.
Today so many institutions seem diminished that the sense of loss at this news stretches beyond the corporate suite. Where in Congress, the media or government is a leader of such principle?
This is why Jamie Dimon, the head of JPMorgan Chase, could say, with tolerable hyperbole, “Warren Buffett represents everything that is good about American capitalism and America itself.”
On Wall Street, Mr. Buffett’s most distinguishing mark (aside from sheer skill) was his fealty to what many leaders proclaim but few adhere to: unwavering focus on the long term.
As recently as Berkshire’s annual meeting on Saturday, when he dropped the big news, Mr. Buffett replied to a shareholder’s question on whether he was taking steps to hedge the effects of currency fluctuations on the company’s quarterly or annual earnings. With a bemused grin and one of his patented lectures, he said, “We don’t do anything based on its impact on quarterly and annual earnings.” He added, “What counts is where we are five or 10 or 20 years from now.”
It sounds easy, but a vanishing few could ignore the momentary fashions, the short-term distractions. His ability to look past the next set of numbers is as rare in business as it is in politics. It required an internal value system, a willingness to think for himself.
Contrary to what is often written, Mr. Buffett’s biggest coups were not based on privileged access. He invested in Coca-Cola in the late 1980s and in Apple starting in the mid-2010s based on his evaluation of the publicly reported data. Every investor on the planet had the same information.
They were signature moves — big but well considered — notably unheeding of the Wall Street fetish for diversification. One of his favorite aphorisms was that investors would invest more wisely if they were told at birth they could make only 20 investment decisions. Like many of his best sayings, it was also a commentary on living. Selectivity required courage, personal responsibility.
He lived that way. He had no corporate hand-holders. His sidekick, Charlie Munger, was a sounding board, but Mr. Buffett spoke for himself. I would call from time to time (he even kept the same number) and got right through. Never did I hear, “He is in a meeting.”
