Chapter 13 10 Back to Washington

When Warren.Buffett appeared in Catherine from the sky.Graham's company, she entered the most important transition period of her life.Her father bought the nearly bankrupt Washington Post in 1933, the last of a city with five newspapers.Catherine took over control in 1963 after her brilliant but eventually deranged husband pulled the trigger on his temple.Graham was not as overwhelmed by such surprises as others, and at best she expressed little sympathy for the incident.As Eugene.Meyer's daughter, Graham, lived in the solitude typical of a wealthy family.My mother was a financier, a politician, and the head of the Federal Reserve Board. She was also a sophisticated and indifferent mother.Growing up in a world of governesses and private schools, she was used to receiving letters back from her mother's private secretary.At a very young age, Graham worked as a journalist, but it never occurred to her that she would run the family newspaper.After getting married, she devoted all her energy to building her own family.

When pushed into positions of power, she appeared shy, coy and deeply inferior, was revered by her male colleagues, and Graham himself said in an interview that, in the way society is run, " A man is better suited for the job than a woman." She only wanted to be a middle manager.In fact, responsibility can be a tonic.At the time, the Post was an intellectual but somewhat narrow-minded newspaper.Graham hired Ben Japon.Hilardley, Newsweek's Washington bureau chief, came to run the paper, and Benjamin, with her help, propelled the Post into the top ranks of American news.In 1971, when the Post company's stock was first listed, Graham put aside that vacillating adviser and risked prosecution from the Nixon administration to publish "The Secret History of the Pentagon," an account of the Vietnam War. (The U.S. government has passed an embargo restricting publication in The New York Times).Later, she brought the Post's investigation back to Watergate.Although the Post's Florida television license was threatened, perhaps at Nixon's instigation, Nixon's attorney general, John N. Mitchell, censoring the forthcoming story, said: If so, then Katie will not be able to press herself into the leveling machine to die." Graham knew that he had achieved his goal.

But the second step in her repositioning has yet to take place.Despite its demeaning status in political circles, The Post is not at all attractive as a business.Its leading paper dominates the Washington market, but its profit margins are a mediocre 10 percent.Its television business is in the same boat. After The Post went public in 1971, Graham began to turn his attention to profit and loss.But she has left financial matters to the chairman and her adviser, Fritz.Attorney Beebe handled it, and in Graham's words: "I think charts and numbers should still be done by men." "The first female chairman of the weekly top 500 companies.She had bravely declared to security analysts that she wanted a Pulitzer Prize for Management, but the Wall Street world terrified her.That's exactly what happened when Buffett started buying her shares.

Graham via Charlie of the Washington Monthly.Peters befriended Buffett, but had no idea who Buffett was or what he was up to. Alarms were rife at The Post Limited; Kay's son Donald, who was trying to improve his status at the time, warned that he feared the company would be taken over by some "extreme leftist from Nebraska," Kay said. I was also terrified, so I desperately asked my friends in the publishing industry to find out about Buffett-"following his tracks, Like a dog circling a snake. "There's really no need to do that because, according to Bradley, The Post has two classes of stock. Only the Class B shares, which have very limited voting rights, are publicly traded. Control of the company lies with the Class A shares, which It is only in the hands of the Graham family. But Kay is a novice after all, Peter Drew, the senior vice president of the newsweek department of the Post, has been comforting her and said: "Don't worry if you have A shares in your hands. ! "But Graham was still panicking, she kept saying: 'What is he going to do?Someone wants to compete with us for a board seat? "

Buffett suspects that as a shareholder holding 10% of the shares, his influence on the company may be as light as a feather.So he wrote her a letter—"Dear Ms. Graham..."—in which he recounted his audacity as a newspaper boy for the Post and denied any hostility.She showed this letter to many friends who knew the art, Andre among them.Mayer and Chicago banker Robert.Abd and so on.Everyone warned her that Buffett's gesture of kindness might be a conspiracy, and advised her to stay away from him. Graham had relied too much on her advisors before, and if anything, she followed her instincts this time around.She wrote back to Buffett, suggesting that the two meet and talk.

While Graham was visiting the Los Angeles Times, Buffett drove up from his Laguna Beach home, and the two had what Buffett called a great time together.Sensing her anxiety, Buffett agreed to stop buying stocks.Although Graham was still uncertain about him, she invited him to see her company when he came East. Warren and Susie checked into the Madison Hotel in Washington, just a block from the Post, during this intense time.Printers were grinding foreign labor, and police and unionists faced off in the street.Buffett snagged a black tie and drove his wife to lunch with Graham.At that time, he was sitting with Barbara.Bush and Jane.In the middle of Muskie, waiting for Graham to arrive.

But no one came.Finally Tom.Murphy, the chairman of the Metropolitan Corporation and a close friend of Buffett, had lunch with Graham and suggested that she invite Buffett to the board.When Graham visited Buffett in Laguna, he also tried to please her.He bought an umbrella and beach chairs—which caused an uproar in Buffett's family, because no one had ever seen Buffett in the water.Graham leaned over and said, "I hope you join the board one day." Buffett said, "So what are you waiting for?" As Buffett drove her back to Los Angeles, she said, "If you Say anything you want to me, but do it softly. If someone yells at me, I'd rather hang myself." Buffett didn't really need her to tell him that.

In the fall of 1974, Buffett became a director, and the rest of the directors—a handful that included Graham's relatives, the Post executive, and Kay's friends—were worried about him, quoting In the words of Newsweek executive Drew: Warren, an outsider from Omaha, owns 10 percent of the company.Our reaction to this was "why have we never heard of him?" It was scary, he was the first person to come to the table with a chair himself. Buffett is well aware of this.He told executives why he liked The Post Company as an investment and how, from personal experience, the paper gave him a sense of home.Like the other newcomers to the club, all he could say was to be here, how excited he was, and so on.

He signed against Don.Graham's power of attorney (which entitles Kay's sons and heirs to vote for Berkshire) -- an unusual gesture of loyalty to management.At the same time, he also declared in writing that he wanted Berkshire to hold its "Post" stock "forever"-others were just is the rhetoric used to confuse the modern portfolio manager.Buffett used various methods to imply that he was not only an investor, but also a partner, just as he once did to Betty.Peters did the same. Buffett began to come to Washington frequently.The night before a board meeting, he was staying at Graham's palatial home in Georgetown.Bradley, no longer a redneck, said: "We're looking forward to being on stage one day. We've never met someone so rich."

He seemed mesmerized by us, and we were intimidated by him.He's been wearing a blue leather jacket for years, and everyone seems to want to find something wrong with it.I think that's why he always wears it.He would join in the fun when editors stopped by at a board meeting to chat about a few stories.He loves getting involved and the casual, relaxed relationship between Kay and me.Once we were playing tennis and I cornered her against the railing.“I really have to respect someone who dares to drive his boss over the railing,” says Warren, who always had an uncanny, highly contagious enthusiasm.

The executives at The Post are used to thinking of themselves as journalists—thinking of themselves as news moguls.Buffett began to instill them with bits and pieces of financial knowledge.At one point, he popped into Droe's office to ask about Newsweek.Later, he begins to explain what he thinks about the Newsweek franchise — in which he uses an analogy to a hamburger chain that is easy to understand. "When I finished listening to it, I understood it better," DeLo said. "He was like a laser beam that brought you together. But never made you feel stupid." In particular, Buffett became Graham's personal tutor.Whenever he came to Washington, he brought a stack of annual reports and asked her to read them line by line.One day, Buffett gave her a Walter.The back cover of the Disney report shows a child sleeping in a stroller.Buffett noted on it: "This is you after reading your 20th annual report." Some of Graham's colleagues felt that Buffett was manipulating her, but Graham found it meaningful to be with him. He didn't tell her what to do, but only gave advice and advice. His charm was that he was rich. Patience, it seemed to be a strong magnet for her.The more Graham got to know Buffett, the more she liked his views. Not long ago, Buffett made an important suggestion that the Post should buy back a large portion of its own stock, which Graham thought was insane.How can a company grow if it repays its capital?Buffett doesn't think the overall growth rate is important - the important thing is the per share growth rate, it is like reducing the number of slices of pizza, if the stock can be bought back at a low price - the Post stock is very cheap at this time —then there would be more cheese on each pie. Buffett also helped her tackle the problem mathematically, writing and drawing in her book-strewn Georgetown study. Graham embraced these sentiments, talked about the matter with other Post executives, and they found her using a lot of financial jargon.She publicly quoted Buffett, and some people took offense to it, responding to suggestions from staffers with an exasperated way: "Interesting — let's ask Warren!" A year after Buffett joined the board, Graham decided to call a strike.She had longed to reduce the severe overcrowding of the Post's pressroom and wrest control back from the militant printing unions.Strikes intensify as printers smash factories, (notorious placard announcing that Kay's late husband, Fell, shot the wrong Graham.) The Post Only the second-ranked "Washington Star" took the opportunity to start poaching its advertisers. Graham worried that the Post would win the strike and fall behind the competition. "All I need," She said, "It was to find someone I could totally rely on." That person was Buffett.He promised he would run the business himself, and he would warn her if he thought the strike would pose a long-term threat to the Post franchise—the very existence of which was his reason for investing.He didn't have to, because four months later the unions were breaking up and the Post was still on top. Later, Time Inc. bought the defeated "Washington Star" and negotiated a joint venture with the "Post".It argues that pooling agreements can reduce costs and also serve as a civic virtue to keep Washington in possession of two newspapers. In the proposal proposed by the Times, each company would take an agreed-upon share of the proceeds from the newspaper union. share. Buffett firmly opposes this suggestion.In his view, the Post had 66 percent of the circulation in Washington and was on the verge of dominating the market, so there was no need to compromise with the No. 2 company.Mainly due to Buffett's influence, Graham's counter proposal was even more violent, which was rejected by the "Washington Star".Not long after, the Washington Star went bankrupt—a stroke of luck for the Post. Graham talks to Buffett almost every other day or so, several times a week. Once Graham had to give a lecture and she was so intimidated that she called Omaha and Buffett would give her a thoughtful answer right away—she had taped their conversation. He got to the end.I said "What?—can you say that again?" He wouldn't do it.The words come out of his mouth so quickly that it takes your breath away, and he can't even recall them himself. Once, when Graham called, Don.Danley, Buffett's high school pinball buddy, was visiting Buffett in Omaha, and Buffett tried to reassure Graham that she was worried that USA Today would take action against the Post.To Danley's amazement, she talked to him on the phone for half an hour. Since Buffett was on the board for a while, he began to push her to become more independent. At one point, she sent Warren to Washington to participate in a negotiation to add a post to the Post's Washington TV station. A sum of cash, exchanged for a Detroit TV station. "No," Buffett told her. "You negotiate." "Okay then! How much will we pay?" Graham asked. "I don't know. If you think about it yourself, you can figure it out." But in essence, every major decision is permeated with Buffett's influence. In particular, he prevented Graham from participating in the nearly white-hot bidding war for media assets.A relative novice, Graham was the subject of high-profile media outlets such as Tom, chairman of the fast-growing Metropolitan Corporation.Murphy, and Timms, who seemed to be buying everything.Miller and others are terrified. She was tempted to follow their bids, but Buffett kept reminding her that it was better not to spend the money. When Kentucky publisher Barry.When Bingham offered to sell the Louisville Country Journal and the Time to the Post if Graham could beat Ganritt's bid, Graham ① The Newspaper Protection Act of 1970 allowed competing newspapers to merge their operating business divisions, but to retain their respective editorial staff—but It has to be that they can show Fair Play that if they don't, one of the papers will go out of business. Called Buffett last night, and while he realized the price was outrageously high, he was careful not to be explicit, which in a subtler sense was more effective.Just as the principal fully trusts a student, a sincere student will never let him down. "Know how much Kay wants to do that business," Don.Graham meant the Country Journal, but Kay finally let it go. Another time, David, an investor who wanted to buy the Dempster sand control plant from Buffett.Schedrasl wanted to sell a cable company to the Post.He dined with Buffett and Graham in New York.Davide was impressed by the lightheartedness with which the two of them worked together, but at the same time he anticipated that his purpose would be thwarted. "Kay was very interested in cables," he recalls. "She was very sophisticated and thought about it strategically. But I said to myself, 'Buffett is not going to let her spend that much money.'" Unsurprisingly, Graham's dependence on Buffett became more than just a business consultant. As a wealthy widow, she was very distrustful of other suitors and lived a near-reclusive life.She has a fragile personality, always keeps people out of her arms, and appears very arrogant. Charlie of the Washington Monthly."Kay desperately needed a friend," Peters said. She didn't feel Buffett felt threatening, and the two became close, with Graham inviting Buffett to her Virginia farm and home on Martha's Vineyard.Buffett also invited her to play in Laguna Beach.Graham also started attending Buffett's Ben.Meeting of the Graham group. Both of them have humorous personalities, partly due to their different backgrounds and qualities.When Buffett invited Graham to visit Omaha, he knew she had no idea where Omaha was, so he decided to make fun of her.Once on the plane, he asked her to draw a map of the United States, showing Omaha.The map was so bad that he wanted to grab it as a souvenir, but Graham was quick and tore it to pieces. Another time, after they arrived in LaGuardia, Graham, eager to call, asked if he had a dime, and Buffett fumbled in his pocket for a quarter.Like other millionaires in Nebraska, he couldn't bear to waste a quarter, so he ran out to change it.Graham yelled, "Give me that quarter, Warren!" Buffett rarely takes his wife with him when he goes to Washington, but always walks around the city with Graham. "Kay's social circle expanded a lot." Writer Jeffrey.Cowan said.Says another friend, “The Washington Post literally changed his life and the people he was dealing with.” All of a sudden, Warren of Omaha.Buffett and Henry.People like Kissinger dealt with each other.lis.Smith, an essay columnist, reports that since Buffett became Catherine.Graham's regular client and advisor later, he became all the rage.Smith added: "The whole Washington society is very excited, because no matter how elegant and dignified the people present at the dinner, Mr. Buffett always only drinks Pepsi." In a controlled environment and to bring people together. At Graham's birthday party, when the greats dined together, Malcolm, the publisher and connoisseur of literature, brought a bottle of fine wine.The bottle was bottled the year Graham was born, and Malchim used it to imply that he had paid for it.When the waiter walked up to Buffett, the loyal Pepsi drinker stopped him: "No, thank you." He said, covering the cup with his hand, "I think I should save some money." When Buffett was in town, Graham had chefs make him hamburgers and filled his Manhattan apartment with Buffett's favorite treats, peanut oil and strawberry ice cream. "When he came," she recalls, almost flatteringly, "there was just cheeseburgers and fried—what do you call it?—French fries, all covered in grains of salt." make him behave more gracefully Some, she took him to try on leathers, and spruced him up in pretty costumes. Buffett, in turn, took Graham to cultural monuments like the Hathaway Textile Mill in New Bedford. "He wanted me to see it," Graham said.She considers him her "best friend" and relies on him for both personal advice and business inquiries.Buffett also suddenly became the uncle of Graham's children.He goes to Washington at least once a month and changes all the clothes in the Graham parlor that even Buffett's kids don't know what to do with. In an interview, Graham said that "I'm young" -- she happened to be 57 when Buffett joined the board -- "which was a real surprise," but the remark did not stir up questions about her affair. rumor.Tom.Murphy, who also visited Buffett, said warily: "If I use him, it's kind of a scowl." Buffett has a lot of female friends - "Happiness" magazine writer Carol.Loomis, Ruth.Michelmore, Barbara.Moreau and so on.Morrow considered him a "feminist" because he was kind to women. "He has an eye for women," she said, referring to Buffett's now-out-of-fashion chivalrous demeanor.He had an abhorrence of crude and dirty jokes, though he did tell some humorous jokes about the bed-curtains. Susie was not at all nervous that Warren had so many female friends.When she was reminded that Warren was wasting too much time in Washington, Susie replied that she was not interested in the form of things per se, but in the purity of the heart—without embarrassment or embarrassment in saying this . (They both lived at Graham's when Buffett was in Washington.) However, by the mid-1970s, Buffett's life lost its coherence.Susie had given up and given up so much for him, and now, she told a friend, she wanted to organize her life. She's heavily involved in a campaign to save a local high school that's been losing students because of race, and she's starting to travel alone.It was clear that she had no interest in Warren's work.Peter, the last child left in the family, found that the family was becoming more and more loose, with Dad often staying in Washington, and Mom always seemed to be out, so Peter had to cook for himself.Buffett realized that, like himself, his wife needed "a Washington Post" in her life.In this issue, they talked about children who are about to grow up.He said: "Susie, you're like someone who's been working for 23 years and then lost their job. What are you going to do now?" Susie's dream was to be a singer, and no one in the family was surprised, because she was used to walking up and down singing while Warren was working.Now that she has some free time, she's with a local band, Bob.Edson.Trio worked together to make appearances at certain private parties.Whenever she thought about performing in public, she was always on edge, but Warren was supportive, telling her that if she held back out of cowardice, she would regret it in the future. In 1975, in a woman named Eunie.With the help of Deneberg's friends, Susie overcame her fear and appeared on the stage of a nightclub called "Let's Let Out" in suburban Omaha. Suzy has since started her acting career at Café French on Omaha's cobbled Market Street neighborhood.The owners of this coffee shop are a couple of Omaha guys who have traveled a lot.They are dancer Michael.Harrison and the culturally avant-garde Anthony.Albert. Suzy once hosted a Planned Parenthood benefit at the restaurant. (Charlton Heston was also there, eating nothing but $175 a pound of caviar.) Another time, she ① Once in California, the Buffett family with Roy and Massa.While taking a walk, Toris passed a tourist shop and saw a There is a distress sign next to some extremely economical bikinis, and Buffett can't help cursing: "Do they need a fat woman?" She performed a show for disaster relief in Africa—like the guests, she wore a wavy chintz top, a bright silk scarf and was barefoot.In Omaha, a housewife in her 40s is an odd sight on stage, but people in the city knew Warren's wife was a free-spirited figure long before word got around . In the Café de France, Susie performs in a blackened stone cellar.She has a slender figure and looks very sexy, and the metal pieces all over her body are shining with charming light.She was even more beautiful than when she was married—high cheekbones, short brown hair, and large, terrifying eyes. Her voice is slightly thinner when she speaks, but when she sings it takes on a husky quality, and she performs deeply stylized jazz and pop tunes, such as Melancholic Stephen.Sondheim's "Let the Clowns In".The first round of performances lasted 6 weeks, attracted a large audience, and the response was quite good. Kent, an artist in Omaha.Says Bellows: "Susie is a diner singer — passionate, unique. I remember Warren being there one night and the look on his face like that." When Susie performed on stage, Buffett looked at her with joy, as if fascinated, and said to a friend: "When Susie sings, her voice is so sweet, it almost takes my breath away." Regarding their private life, Buffett always seems very sweet when talking about it.He often said that before meeting Susie, he had been depressed; without Susie, he would not have achieved what he is now.As a couple, they set aside a traditional pattern.Despite their separate interests, and their arrangements, Buffett has always depended on her, and even now she cuddles up to him in public, holding his hand as if they were teenagers. year old child.She understood that she was like his muse, and would never say "no" to him. By contrast, Buffett and Kay.Graham was totally different when she was with him, she depended on him not only because she was financially inexperienced but also because she was insecure.To put it lightly, it can be said that Buffett's help to her is no different from that of other colleagues.Of course, he also wanted to make some profit from the Post Company, but that intention didn't take away from the fact that he was animated by Graham, and he himself was very tolerant and magnanimous to her. Publisher Stan.Lipsey once saw Buffett and Graham go to Niagara Falls together. "I don't know the exact answer," Lipsey said, "but I don't see anything in them that between the people they slept with, Kay was authoritative and shy. 1000 999 people out there think twice about what they want to say to her, and Warren doesn't. The two of them became bosom friends." No "answer" seems to explain why Buffett handles this relationship so well.Maybe the annual statement he brought her had something to do with it.Buffett likes to play the role of teacher, like he wrote to his partners, and Graham is a very charming and receptive student. One director of the "Post" said: "This idea is too stupid No, she always had dinner before the meeting, and we all had to leave except Warren. I never thought it was about sex." Executives saw that the Buffett-Graham alliance had a profound impact on the business and, ultimately, on Buffett's investments.It was impossible to get Graham to write a check. For this, everyone has every reason to blame Buffett. Before Orlando was thoroughly developed into a Mecca of the tourism province, Joel, the head of the advertising department.Chasman had an opportunity to buy a TV station for 20 million yuan. "It was a painful deal," he said. "You knew it was going to have a big market right now, but there were some people in the upper echelons of the company who were so elusive that it got turned down." "Is someone really unpredictable?" Graham once called Buffett, and Buffett thought It's overpriced. Opportunities were passed up so often that the Post executives were frustrated.Buffett has little interest in cellular phones or cable television, because they require a lot of capital, (he invested in The Post because its publishing and television stations—unlike airlines—generate direct cash flow , the profits do not have to be reinvested back into the enterprise).He is skeptical about starting new businesses or new technologies.Because they are so new, it's like changing the taste from hamburger to foreign food. Buffett feels uncomfortable when he can't see a business in person.It is not enough to have a new project with expert guarantees on which executives rely, and if he does not understand a risky venture -- instinctively -- he thinks he is speculating . And Buffett will never speculate. Because of Graham's dependence on Buffett, the Post sometimes misses the mark.Confident Cosmopolitan CEO Tom.Murphy also discussed various things with Buffett, but he always selectively adopted his suggestions.But Graham, who presided over the work behind the revolving door in the executive room, even went to him for things that Buffett was not proficient in, and Buffett's conservative attitude gradually permeated the entire board. Before joining The Post, Chasman founded an all-news format at Wins Radio in New York. In the late 1970s, he suggested that The Post create an all-news cable show, Ted.Turner had suggested the same idea.However, it was not passed at the Post's first board meeting. "I don't think they're going to buy anything at all, which is against the grain of an entrepreneurial business," Chasman said.He was so devastated that he wanted to spin off the Post's broadcasting division into an independent company. "Post" president Mark.Marr wrote a long letter when he resigned, urging the Post to be privatized—because in his opinion it was unwise for such a bloated corporation to hold public money, Richard.Simmons took Marr's place. After another proposal was rejected, he said dryly: "The wise men of Omaha have spoken again." Funny thing, Post executives didn't really dispute Buffett's reasoning. In a typical comment, Marr said: "I don't disagree with him, the price is too high. Meanwhile, on a personal level, executives can't help but like Buffett.Like everyone else, Simmons has made the trip to Omaha.The itinerary is always the same, including a steak dinner, a trip to the same place that Buffett used to hang out in his childhood, and listening to Buffett's words of wisdom. " Buffett rarely speaks at the Post's board meetings, but occasionally chimes in. At a meeting, Jeffrey MBA, a young man dedicated to finding new areas to invest in.Epstein provides an overview of what each consumer spends in the media and entertainment industry sector.He pointed out that the number of home entertainment reached 5 billion US dollars. Buffett raised his thick eyebrows three inches high: "Five billion, that's an interesting number," he said. It costs $20 on video." That's the way his mind works, numbers, numbers. It was immediately clear that Epstein's numbers, if true, would not stand up to scrutiny.Needless to say, The Post is not involved in the video business. Surprisingly, the Post barely had any big deals during Buffett's tenure on the board. ① These figures are based on store purchases, which greatly overestimate the actual level of purchases.In less than a year, Art, the king of the video industry Shocked by the loss, there is a crisis in the industry. For 11 years, he started and closed a sports magazine; he sold a newspaper in Washington and bought one in Trenton; shares; but some of them were sold one after another.As before, 98 percent of the profits "still come from The Washington Post, Newsweek, and four TV stations." Meanwhile, The Post's revenue has held steady at around 12%, which isn't impressive.The only notable change is its improved profitability. From 10 cents per dollar of sales in 1974 to 19 cents in 1985, the company's return on equity has doubled. Of course, the Post would have already won the newspaper war without Buffett.He also didn't play a role in doubling its TV station's profitability. His most important contribution did not come until after the profit had been made.What Buffett had instilled in Graham was a shareholder-oriented way of thinking about business at a time when media companies were scrambling to grab turf.He kept reminding them—and to Ken outside the mill all those years ago.It's the same thing that Chas said - the size of the business is not the goal, but the return to shareholders is the goal. The opportunity was missed, but he saved The Post from a real corporate tragedy of throwing profits that should have gone to good businesses into poor ones. Under Buffett's persuasion, the "Post" used its excess cash to recover shares worth $7.5 million, which is 40% of the total number of shares, and its net profit increased by 7 times. The cheese on the pie has grown 10 times. Of course, companies across the media world were interested in those years, but in terms of the only metric Buffett recognized—the conversion of profits into returns to investors—the Post was the leader in the field. Consider that over the years, from 1974 to 1985, The Post earned a respectable 23 cents for every dollar of shareholder capital, compared with 19 cents for the Cosmopolitan and Times Mirror. It's also passable, but also slightly lackluster. Shares of The Post continue to appreciate at an astonishing rate of 35% compounded annually.Adding bonuses, the overall annual return is 37%, Metropolitan is 32%, and Times Mirror is barely 24%. The Post does a little better than all of them.By the time Buffett was about to leave the board at the end of 1985, Berkshire's $10 million investment had appreciated to $205 million. Not long after Buffett joined the Post's board, he became interested in another long-established company.This company not only has a long history in Washington, but also was famous as early as Buffett's youth.When Buffett took the train from Columbia to Washington and opened GEICO's doors, it was a tiny company.In the ensuing years it grew remarkably rapidly.Lorimer.Davidson, the man who listened patiently to Buffett's questions that Saturday years ago, has been promoted to executive, and GEICO has catapulted to become the nation's largest auto insurer. However, after Davidson stepped down in the early 1970s, GEICO had new management, and the atmosphere at the company changed accordingly.at Ralph. Under the leadership of C. Peck, insurers were tossed by the new "no-fault" law and the rising inflation rate. Peck tried to overcome these problems to seek his own development, so he relaxed the company to only accept low risk Historic policies for drivers - even keeping prices low in general.Naturally, profits were up and the cash was rolling in. For a while, everything looked beautiful.Sadly, but never surprisingly, high-risk drivers are starting to think about getting more claims, and inflation has caused the cost of repairing GEICO-insured cars to go up a lot. To make matters worse, GEICO's management did not have enough money left to cover losses, and in 1974 During the critical 15 months between 1975 and 1975, the company either denied, belittled or lied about the issue -- not just to Wall Street, but to itself.Lorimer who is still in power.Davidson complained that the company was screwed, but even he didn't realize how bad it was. We didn't realize how serious things were until the board retained an independent insurance accounting firm. We got the report the day before Christmas 1975, and it was a real Christmas present.We have a shortfall of tens of millions to make up - and to our horror - we don't have the money at all. In early 1976, GEICO announced a staggering $126 million in losses for the previous year. In 1974, the stock hit a record of $42 per share, but now it is only marked at 478 yuan. It's been a long time since Buffett sold his small amount of GEICO stock, but he has always harbored a secret desire to reinvest in the company on a massive scale, as he told the Washington Post. The newspaper did the same.For the rational Buffett, perhaps a bit sentimental about his past (although he wasn't dazed about investing in GEICO when the stock was expensive), GEICO stock is cheap and it's in a very bad situation. in big trouble.And, when Buffett was in California, Ben.Graham was chairman of GEICO and had some savings in GEICO stock.So helping to save the company has a double meaning: following in Graham's footsteps and saving his company. At this time, Graham and his lover Marlowe were leading a quiet and modest life, spending half the time in La Jolla and the other half in Exon-en-Provence.At his 80th birthday party, when his whole family came to La Jolla, he looked back on his life with fondness, but said nothing about his career on Wall Street.He spoke of the pleasure he had found in aesthetics, literature, art, and his many female companions, and recalled, like a child, seeing Mark in his early years.Twain's scene: "He was radiant, dressed in white, and had curly silver hair." Graham, however, did not lose interest in stocks. He had an account in La Jolla, although he rarely traded. But the "father of security analysis" would come to the broker's, sit down at an unobtrusive table in the corner, and read a favorite book on S&P.A visitor to Graham found a book in Greek on his desk and a statue of Rodin in his bedroom. While GEICO was struggling, Graham called Buffett to co-author a revised edition of The Intelligent Investor.They kept in touch by writing letters, but Buffett found some fundamental differences between himself and his teacher.Buffett wants a section on how to identify a 'big business' (Example: See's Candy Company), which Graham believes is difficult for the average reader to reach.Moreover, Graham suggested that a person's assets invested in stocks should be capped at 75%, while Buffett is more courageous, and he is willing to bet all bets at the right price.So Buffett really wanted to give up his co-author status, but only wanted to be mentioned in the book as a "co-author". Ironically, no stock suggests the pair's philosophical differences more than GEICO stock.Graham said it lacked a margin of safety — and it did when the company was on the verge of bankruptcy.And Buffett sees an opportunity if management can be improved, so he's closely watching its dramatic changes. In April 1976, GEICO held its annual meeting, and 400 shareholders packed the Hilton Hotel in Washington.It was here that the shareholders nearly threw the company's executives out of the building.Within a month, Peck was fired.A 43-year-old travel company veteran - John. J. Byrne took his place.Bourne is very energetic and often runs around.in New Jersey West, he went to visit James.Chijan, a member of the state insurance board, asked him to raise rates.Then Bourne, finding himself cornered, grabbed a piece of paper from his pocket, slammed it on Heejang's desk, and said, "Here's your damn license, we're no longer citizens of New Jersey." Then, He fired 700 workers on the spot and told 300,000 policyholders across the state to find another insurer. Byrne closed 100 offices across the country, laying off nearly half the workforce, but it wasn't enough.Insurance regulators in Washington, D.C., threatened Byrne to stop closing unless GEICO could find other underwriters to cover some of its customers (this is known as reinsurance).Byrne made an appearance of assent, but by early July, industry leader Steit.Fam deserted him like a casual tourist. Now that GEICO's fortunes were at rock bottom, Buffett was keenly interested in dabbling in GEICO -- but, as usual, he called in others to clear the way for his involvement.By Buffett's will, Kay.Graham called Byrne and said, "There's a guest of honor who wants to meet you." Byrne said find another time.Byrne later picked up Lorimer, an elder statesman at GEICO.A call from Davidson asking if Bourne had indeed snubbed Warren.The Buffett case.When he heard that it was true, he cried out, "You stupid ass! Go to him!" In July, on the eve of the Post board meeting, Byrne was at Graham's mansion.At this point GEICO's stock was worth only $2 a share. The once unconquerable company was in danger of becoming the insurance industry's worst loser in history-in Buffett's words, "the Titanic event of the insurance industry." .” When Buffett led Byrne into the magnificent library with the ceiling hanging high above his head, a mysterious memory hit him. When he knocked on the door of GEICO 25 years ago, he was led to Lorimer by the janitor.The scene in front of Davidson came back before him, and although his situation was completely changed, his behavior was the same as before.Once again he was eager to learn as much as he could about GEICO.Buffett talked to him for hours, the ruddy Byrne recalls. We talked about two or three o'clock in the morning, and he wanted to know what steps I was going to take.How do I feel about the ability of the business to survive.Remember we talked about family, and some other stuff, all the way into the night.But most of the content was about GEICO, I would dare say maybe 80% of the conversation was me. Buffett knows almost everything. GEICO still maintains a low-cost operating method (no sales representatives), which once gave it an advantage.Roughly speaking, GEICO spends 15 cents of every dollar of profit on fees, while other insurers spend about 24 cents on average, so GEICO can charge less and thus be more selective in selecting customers.In recent years, GEICO has apparently abandoned this successful approach, but its underlying cost advantage remains unchanged.Buffett believes its profitability can be restored as long as it weathers the current crisis. Even when GEICO was in utter disarray and threatened with bankruptcy, the genius Buffett saw it clearly.Like American Transit in the 1960s, it is "a great business going through a difficult time".And even in these trying times, he could foresee that the storm would pass. That evening, Buffett himself commented on Byrne, who impressed him deeply; he talked like a business owner, not a manager or a bureaucrat, and he was resolute and energetic, and this was a time of crisis needed.Maybe he has a changeable temperament and cannot lead his subordinates peacefully, but as a ① If you want to compare with the current price, you must consider that around 1994 GEICO split its shares at a ratio of 1:5. Wartime general, Buffett thinks he is an excellent candidate. I didn't ask, "Jack, how long will this take?" It's not predictable at all, (but) Jack understands every aspect of the problem very well. Anyway, Byrne was going to do it, and once he did, the stock would prove itself to be a good deal—maybe even better than that. A few hours after Byrne left, Buffett got up and went to Goldman.Ronald, a broker at the Saks Exchange.Gutman called and ordered half a million shares at 218 and said he was ready to "buy a few million of it."At the Post board meeting, a dizzy Buffett leaked the news: "I just invested in a business that might go bankrupt. Maybe next week, all the investments will be gone." But once he crossed the line, he It will never stop.Berkshire quickly invested more than $4 million in GEICO stock. "That night at Kay's house was a turning point," Byrne said later. But GEICO was far from out of danger.What it needs is, first, to convince the regulatory authorities to give it enough time; second, to persuade competitors to provide it with reinsurance, so as to reduce the risk of GEICO's loss. Buffett provided reinsurance to Berkshire and also to Maximilian, DC's insurance inspector.Wallach made a phone call.In fact, Buffett thinks that if Berkshire had thoughtfully invested millions in GEICO, then perhaps Wallach shouldn't have been so anxious to close it down. At the same time, Bourne was also trying to get other underwriters to agree to take on reinsurance—but it was not enough to guarantee it with the word "if", GEICO had to raise new capital.Byrne went to 8 companies on Wall Street, but was rejected one by one.He returned to Salomon Brothers, then a small company, in great frustration. Salomon's second in command John.Gutfreund had already bluntly rejected Byrne.But there was one named Michael.Freekel's junior research analyst had invited Byrne to talk to Solomon after lunch, and since Byrne was coming to the building, Gutfreund agreed to let him drop by his office. When Bourne sat down, Gutfreund took the cigar from his mouth and sneered at him displeasedly, "I don't know who will buy this damn reinsurance agreement you want to sell." He said . Bourne replied calmly, "You don't know the damn thing you said." Gutfreund was impressed by the manliness he displayed.After he sent Byrne out, he told Solomon analyst Freekel to research GEICO and write a recommendation.Frikel's conclusion is that GEICO can be saved, and should be saved.If it comes back to life, he says, "it will be valuable to policyholders and profitable to investors." Gutfreund was reassured by the news of Buffett's investment. In August, Gutfreund agreed to run GEICO to underwrite $76 million worth of preferred stock, which was an earth-shattering move.Other companies think that GEICO is very dangerous, so they are unwilling to join this syndicate.As is often the case, once the launch fell through, Solomon was left with a whopping $76 million in its pocket. As one of the lawyers involved in the deal dug into the banker's details, Gutfreund exclaimed: "What are you worried about? The job is yours, but the money is mine." On the day before its November release, Salomon looked set to take a big loss. Shortly before the underwriting, Buffett told Gutfreund that he would take all the shares, and It is up to him to set the price.Byrne wanted to sell at $10.50 a share, but Gutfreund was well aware of Buffett's upper limit and insisted on selling at $9.20. He would not make any concessions-not a penny, and Buffett had his back. Finally, the distribution finally worked out.Buffett bought a 25 percent stake, equivalent to Berkshire's $23 million investment.Thanks to the Catch-22, once the investment was made, it was no longer at risk—the additional capital kept GEICO out of danger.In Bourne's eyes, the hero of this rescue was Gutfreund, who contributed to the investment of capital when no one else was willing to step forward.Buffett was impressed by Gutfreund, and Gutfreund was clearly his type of investment banker. In just six months, GEICO had risen to $818—a quadrupling, which was only a faint indication of its potential.Over the next few years, Berkshire doubled its share, making Buffett the controlling investor. GEICO seems to be stuck in the Buffett pattern -- Buffett has a similar influence on many companies. GEICO, like The Washington Post, bought back its own stock, and GEICO's bosses made a habit of visiting Buffett so often, it was completely pasteurized.Byrne is a seasoned connoisseur, but his business relationship with Buffett is no different than Kay's relationship with Buffett.To quote Byrne: I asked him all kinds of questions.He showed me all kinds of valuable methods related to finances.He never spared his time, but never — and never — gave me advice.Warren thought long ago that if he had been a benevolent shareholder, he would have made more money for Berkshire.It was this guy who made him more money. Every year Buffett holds a question-and-answer session with GEICO executives.He was at ease on stage, using Casey.Stengel's technique to avoid being too literary.He treats the motivations of the questions as generalizations, and he goes on to tell a short story, often with a moral in it, in a very simple and unadorned style.He's casual, yet beautiful and precise in his choice of words, and you can't help but be drawn to them. Byrne swears that the folks at GEICO would rather cancel their vacation than miss out on this opportunity.Buffett once said that when an investor enters the stock market, it is as if he has a time card that can be kept forever.Every time he bought a stock, it was equivalent to punching a hole in the card.When there are 20 holes in the card, he will not make more investments in his life.Obviously, this investor will filter out the best spots. Lu, who is running the GEICO investment organization.Simpson said the metaphor had a profound effect on him. In fact, Buffett had long since made up his mind to "make a hole for a lifetime" in GEICO, and spared no effort to make Byrne understand this.This is true both privately and in Berkshire's public reporting.In such an era, managers are either forced to bid up stock prices or face being taken over by others.However, Buffett hopes that Byrne will manage it from a long-term perspective, and has repeatedly stressed that he will not buy the stock. When a Fortune 500 company makes a serious bid to buy GEICO, it faces a test.Byrne had called Buffett to ask what he thought. Buffett said, "It's up to you." Byrne said, "Oh, please—you can tell me what it is." But Buffett said nothing, but agreed to accompany Byrne to a meeting at the Waldorf, New York. — Night market deals in Astoria. Naturally, the bidder and his bankers would introduce themselves to the controlling shareholder.Buffett said: "You're talking to the wrong person, he (Byrne) is the person you should be looking for." Byrne pulled Buffett aside and begged, "Just whisper the price in my ear!" Buffett remained silent. "It's unbelievable," Byrne said, "that we were talking about a billion-dollar deal and he put it all in my hands." In the end, Bernd set a price beyond what the acquirer could afford, and the negotiations were aborted.This is exactly what Buffett wants. He thinks GEICO's good days are yet to come!So why is he still doing nothing? "It was very difficult to know what was going on in Warren's head," Byrne recalls. No doubt, Buffett wanted Byrne to know he trusted him.And he must have guessed, too, that Bourne would not disappoint him once he showed that trust.Anyone can say that Buffett is lucky, unless he is always lucky. Thinking back to the ups and downs that GEICO has been through, Walter.Schloss, Buffett's brother at Graham-Newman, called the whole process "very sad." "Some people become millionaires, some people don't get any benefits, and some people even go bankrupt." Leo, the son of the founder of GEICO.Goodwin had pledged payback during the lows, and Ben.Graham kept his GEICO stock outright.In September 1976, just before the guaranteed repayment ended, Graham died at his home in France at the age of 82. Since Graham's death, critics have often cited the departures between Buffett's and Graham's methodologies, and Buffett has clearly improved.He was not only educated by Charlie.The influence of Munger was also influenced by Philip, the author and investor.Fisher's influence.Each of them emphasized that a well-run company is quite different from a cheap company in popular terms, and that it also has a great impact on his own experience. Buffett analyzes companies more subjectively than Graham.In some companies, such as See's Candy Company, he found "intrinsic value" in companies that Graham never set foot in, but the existence of these differences made further loyalty difficult to achieve.Buffett learned from Graham about the idea that stocks have "intrinsic" value and have nothing to do with the market machine.Indeed, it is inconceivable that Buffett would have terminated the partnership at the height of the investing years and re-entered the partnership at the low point of 1974 had he not read Graham's eloquent metaphor of "Mr. Market." Jumped back.In one of Buffett's articles for the Financial Analyst Magazine, he confronted Ben.The persistence of Graham's method was given high praise: At those seemingly silly moments in the weeks or months following a public offering, Ben's principles always work—they often increase in value after a financial landscape that destroys fragile intellectual structures, and It is also understood by others. Years later, Buffett admitted that the stocks he bought must have been different from the ones Graham would have bought.What he got from Ben was "an appropriate formula for the essence," that is, the principle of buying value, the conservatism underlying Graham's principle of margin of safety and detachment from the daily ups and downs of the market. . Buffett has never denied that he is a Graham follower, nor has he ever denied his affection for the teacher who is not stingy with grades.A long time later, when Buffett talked about his career with the author, he said with obvious joy: "My most successful thing is to choose the right hero, and it all comes from Graham." When the author reminded him, this As the words were being heard by some of Graham's children, Buffett's voice suddenly grew louder. "I wish you could tell Graham," he replied.