newjerseynewsroom.com

BY WARREN BOROSON

NEWJERSEYNEWSROOM.COM

BOROSON ON MONEY

It’s been a dismal year. The stock market (S&P 500) is, after a rally, just about flat. Peace in the Mideast seems as remote as ever. Congress apparently won’t do anything to raise employment. And the Yankees didn’t make it to the World Series.

But at a time when heroes and heroines are few and far between, there’s one undeniable hero: Warren Edward Buffett.

He reminds me of Harry S Truman, with his Midwestern Protestant virtues. The operative word is, I believe, “decency.” By which I mean fairness, sympathy, unselfishness.

Recently he called upon other Filthy Rich Americans to pay more in taxes. As he has pointed out, Buffett himself – like many other Filthy Rich people – pays less in taxes, percentage wise, than the secretaries in his office. A key reason, of course, is that much of his income comes from capital gains (from stocks), which are taxed leniently.

Why, the stooges for the Filthy Rich have asked, doesn’t he himself just pay more to Uncle Sam? Well, isn’t it better if he tried to persuade other FR people to pay their share? Like the Koch brothers? These days being a stooge for the FR seems socially acceptable. Look at all those Republicans in the House, elected to a large extent with money from the FR, who adamantly refuse to raise taxes one penny on the FR.

They’re also trying to eliminate the estate tax – so we wind up with a hereditary aristocracy. Someone has said that the best argument against eliminating the estate tax is … Paris Hilton.

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As an investor, Buffett has helpfully explained his success: “I’m rational.” He buys sure things. Good businesses run by good people. Sometimes they’re selling for a song (the value strategy). Sometimes they’re selling for a grand opera, but they’re worth it (the growth strategy).

I have no particular reason to be an admirer of Mr. Buffett. When I was writing a book about him (“Pick Stocks Like Warren Buffett”), he steadfastly refused to let me interview him. He wouldn’t even answer a series of innocuous questions I mailed to him: What’s his favorite novel, movie, music, etc.? (I did get to ask him a question at a news conference in Omaha, and I think he recognized my name – the guy who keeps asking for an interview.)

After my book was published, I asked Buffett’s secretary what he thought of it. I was hoping for something I could use to promote the book, like “A major contribution to Western literature and to Western thought.” All I got was: “He didn’t find anything wrong with it.”

Along with all his other virtues, Buffett has a neat sense of humor. What does he want people to say about him at his funeral? “My God, he’s moving!” And, from my book, there’s this: The Omaha Club, a dining club for businessmen, would not admit Jews, and one Jewish businessman told Buffett he was upset. When Buffett mentioned this to the club’s board, he was told, “They have their own club.”

Buffett replied that the some Jewish families had been in Omaha for a hundred years, yet they could not join a club that a Christian could join immediately. “That is hardly fair,” he told them.

Buffett then applied for membership in the all-Jewish Highland Country Club. On Oct. 1, 1969, Buffett was admitted. The Omaha Club promptly began admitting Jews.

So, Buffett was asked, why had he joined the Jewish club?

Because, Buffett explained, the food there was better.

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I’ll tell you something about Buffett that may surprise you. He once got into trouble with the Securities and Exchange Commission, and his company had to shell out $115,000. He and his associate, Charlie Munger, owned shares of Wesco Financial, which they considered cheap. Another company, Financial Corp., whose stock was expensive, wanted to merge with Wesco. Buffett, through a company called Blue Chip Stamps, tried to put the kibosh on this unfair merger. They succeeded.

But then – because of the failed merger – Wesco’s price dropped. Still, Buffett and Munger decided to buy more Wesco shares, at the higher price before the merger fell through. After all, they had been responsible for the fall in the price – and didn’t want the people at Wesco, whom they knew personally, to be “sore” about it.