Rahul Jacob: Buffett’s retirement won’t diminish the lessons he leaves us

His voice, as he approaches his 95th birthday on 30 August, sounded croaky. But he replied with a quick reference to problems at the utility business Berkshire owns and embarked on a riff about the foundation of the company’s success: “We will make our best deals when people are most pessimistic." This principle has guided Berkshire over the decades, including during the financial crisis of 2008-09, when Buffett threw a lifeline to Goldman Sachs by investing $5 billion in its preferred shares with a 10% yield.

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Then, in a segue that was vintage Buffett, he pointed out that his strategy had been useful since the Great Depression of 1929-1933. “I was born in 1930 and things got much more attractive in the next two years and apparently I didn’t do anything about it. That was the opportunity of a lifetime, and I blew it." Buffett, the son of a stockbroker father he adored whose desk he still uses in the company’s headquarters in Omaha, observed that while he was fearful of a lot of things, a drop of 50% in Berkshire’s share price “wouldn’t bother me in the least." “Most people react differently. I don’t have emotions about the prices of stocks."

This ability to dispense investment advice with dollops of self-deprecating humour is an underappreciated aspect of why people buy Berkshire shares and keep them for their children to inherit. This will be hard for Greg Abel to emulate when he takes over as CEO after Buffett retires this year-end. 

Speaking to the Financial Times (FT) in 2019 about his absurdly modest comment that owning Berkshire was not too different from buying a US index fund, he qualified it by adding that investors would likely learn more by owning Berkshire. The nearly 20,000 people who attended last week’s shareholders’ meeting was ample proof.

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I have hero-worshipped Buffett since hearing him speak as a cub reporter in my twenties at Fortune magazine in New York. The speaker before Buffett, the CEO of a credit card company, had advised us to answer the phone within three rings. This was to project an impression of efficiency, but hardly a yardstick of journalistic excellence.

Buffett, by contrast, came across as a stand-up comedian who just happened to be a genius stock picker.

I have never fallen for a public figure so instantly, except perhaps for Roger Federer whose ballet disguised as tennis I had watched long before I interviewed him. In the next couple of years, Buffett would sometimes be in the company cafeteria having a chicken salad sandwich with Carol Loomis, a Fortune writer who happened to be a friend of his. News of his presence would send me scurrying down for lunch while discreetly gawking. 

He once called back to patiently explain a witticism of his for an article I was fact-checking. And I would wistfully check the price of Berkshire shares, but its class A shares, the only ones available then and now priced at $768,000, were unaffordable for someone who had just started working. (A second class of shares for small investors came later, in 1996.)

Berkshire always had the advantage of patient capital, thanks partly to its insurance arms. As an FT profile observed, “What sinks many investors who use leverage is a margin call from a lender. Insurance customers don’t make margin calls."

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Often overlooked is how Buffett and his long-time colleague, the late Charlie Munger, kept their hands off the management of acquired businesses. Back in 1988, a prescient article by Loomis pointed out that if the seven companies Berkshire owned in 1987—a Scrabble board of less-known businesses—were clubbed together, they would have “employed $175 million in equity capital… and earned, after taxes, $100 million." These included a newspaper, a regional furniture company started by a Russian immigrant woman and See’s Candies.

I may admire Buffett, but lack the financial acumen and nerve to consistently follow his maxims. I once made a windfall selling as the dotcom bubble peaked, guided by his often-quoted advice to “be fearful when others are greedy." Last month, however, reacting emotionally to share prices whipsawing after the Trump tariff announcements, I sold a chunk of shares, despite a voice in my head warning me that this was the opposite of what Buffett would do.

The author is a Mint columnist and a former Financial Times foreign correspondent.