B000U5KFIC EBOK (6 page)

Cass Lake is one of a series of lakes that stretch north, and each lake
has nooks and backwaters where, according to local lore, bass, muskie,
and possibly walleye are most likely to bite. On the eightieth birthday of a
Star Island neighbor, J.D. Ramsey of Des Moines, Iowa, Munger chided his
friend about his fishing habits, which sound like Munger's own:

"I have seen a lot of peculiar fishermen in my life who, like me, are willing
to suffer to fish in promising water," Munger wrote in a tongue-in-cheek
tribute to Ramsey. "But only J.D., wearing the hair-shirt that duty requires
in his unflagging conception, sees the whole point of fishing as the welcome opportunity to carry small boats through swamps and otherwise suffer in reaching fishing that is selected partly for its difficult access and
partly for the difficulty of encountering any fish. ,2

Barry Munger explained that just as his father is a patient investor, he
also is an extremely patient fisherman. "He tries to find the best technique day in and day out and will stick with that lure, or whatever, even
if others on the boat are having better success with something else. At
one time he was dedicated to a chartreuse jig, day in and day out. I guess
it works, but if I'm out on a day when the fish aren't taking that, I will try
every color in the tackle box."

Charlie and his son Barry on Star Island.

Munger's attitude about fishing is revealed in the story he once told
when musing on the gullibility of many investors:

This fishing tackle manufacturer I knew had all these flashy green and purple lures. I asked, "Do fish take these?" "Charlie," he said, "I don't sell these
lures to fish."3

DAVID BORTHWICK, MUNGER'S STEPSON, said it was at Star Island that he realized Buffett played an exceptional role in their lives. "In 1963 or 1964,
Warren came up and stayed a few days in August. Normally father would
have dispatched Hal [David's older brother] to pick someone up. Father
went himself. That was a clue that this was an important guest."

But it was Buffett's second visit to Star Island that has become legend
among Buffett followers. It was the occasion on which Munger nearly
drowned his business partner.

"I went up with Rick Guerin," said Buffett. "His wife had died. He
had a boy. We thought it would be a good idea if they got away."

John P. "Rick" Guerin, Jr., was at the time chairman of the Los Angelesbased brokerage firm Mitchum, Jones and Templeton. He also served
as chairman of the New America Fund, in which Munger was a major shareholder. Guerin is a street-smart, physical fitness buff who wears dark
glasses, open-collared silk shirts, looks suspiciously like he works in the
film industry, and in fact he now owns his own film company. The most
unlikely member of the stolidly conventional Munger-Buffett circle, Guerin
nevertheless, has been a longtime business associate.

Guerin said his first wife Ann used to call Charlie and Warren
and (Los Angeles attorney) Chuck Rickershauser his master group. Ann
committed suicide in 1980. "It was obviously traumatic," said Guerin.
"Warren and I were talking about it a few days later and about the effect
of the death of a loved one on a child. Patrick was eight years old."

Warren suggested to Rick that the three of them join Charlie and his
family, who were on their annual pilgrimage to Cass Lake. Guerin was
welcomed by Munger, who himself had suffered a tragic and untimely
death in the family.

"We hung out," recalled Guerin. "We played bridge."

And naturally, Munger took his pals fishing.

"Charlie insisted on driving the boat. I offered, but he insisted," said
Guerin. There are several different versions of what happened next, but
generally, the story goes this way:

"It was a calm day. We were out a mile or so," said Buffett. "Rick and I were
talking away."

In an effort to reach a better casting position, Munger put the boat's
motor in reverse.

"Suddenly," said Guerin. "I looked down and I'm in the water. We were
going backward and water was flowing over the gunnel."

Guerin yelled at Charlie, who replied, "I'll take care of that." Charlie
then put on full power, but still in reverse. The boat sank. Both Guerin and Buffett were underwater for a few moments before they popped up side by
side. "Warren's eyes were as big as his glasses," said Guerin.

The borrowed boat, explained Charlie, was not designed so as to
keep the water from rushing in when the boat was going backward. Buffett is athletic, but he is not a highly skilled swimmer.

"I had to help Warren. The story has been a little stretched," admitted
Guerin. "We know Warren was going to live with or without me. I've
often said since, if he were in real trouble, I'd have made a deal before I
helped him get a life preserver. I'd have been chairman of Berkshire Hathaway! "

That mishap, concluded Guerin, is why Charlie's friends sometimes
call him Admiral Munger. Despite the misadventure, Guerin says that the
time he spent at Cass Lake that summer was an invaluable first step in his
recovery from grief. He says it showed him that Munger and Buffett were
more than just business associates.

"Warren gave me the greatest gift he could possibly give: Three days
of his time. And Charlie gave that, too. We try to be realistic and smart
and logical all the time, but there is another side to it."

The way Buffett reacted to the boating accident was typical of the
business relationship between him and Munger. "Even when I took him
fishing in Minnesota and upset the boat and we had to swim to shore, he
didn't scream at me," said Munger.4

One of Munger's children noted, however, that the ill-fated fishing
trip was the last time Buffett ever joined the family at Cass Lake.

Munger said there was another reason Buffett never returned: "After
dunking him in the lake, we tried to cheer him up by making him watch
a bunch of high school students perform Moliere in a Bemidji tent."
Moliere, even if delivered professionally, is not Buffett's style.

An increased percentage of people come from Nebraska. Some
people say they are from Nebraska when they aren't, for status reasons.

Warren Buffett, 1997 Berkshire Hathaway annual meeting

UNDREDS OF THOUSAND OF PIONEERS, heading west to the Oregon
-and Mormon Trails, passed through Nebraska in the nineteenth
century. Omaha was a gateway to the vast, rich lands beyond the
Missouri River, and the ruts left by the wagon trains are visible in Nebraska farm fields more than 150 years later. Omaha was so rough and
primitive back then that one of Charlie Munger's grandmothers for a
while refused to live there; it was too far from the sophistication of her
native Iowa.

"Mother's parents moved to a job in Omaha, "said Carol Munger
Estabrook, "but our grandmother insisted on living in Council Bluffs,
Iowa. It's now full of casinos and strip joints. But back then, Nebraska
was considered more of a frontier than Iowa."

Omaha has improved, but living in Nebraska still is a characterbuilding experience. Temperatures can hit more than 100 degrees
Fahrenheit in the summer and plummet to 40 below zero in the winter.
Two big rivers, the Platte and the Missouri merge in Omaha, and melting
snows can produce early spring floods.

There are many Nebraskans of notable character, including the creator of modern rodeo, Buffalo Bill Cody; novelist Willa Cather; former U.S.
President Gerald B. Ford; entertainers Henry Fonda, Johnny Carson,
Marlon Brando, Nick Nolte, and Fred Astaire; and civil rights activist
Malcolm X.'

Munger says he owes a lot to Omaha, the community in which he was
raised. He paraphrases an old saying, "they can take the boy out of Omaha
but not Omaha out of the boy."

"Charlie tries to make the point that he is the way he is because he
grew up in Omaha," said Munger's daughter Wendy. "But Warren says he
doesn't think so. There weren't any others like Charlie in Omaha."

The first child and only son of Omaha lawyer Alfred C. Munger and
his wife Florence (Toody), Charlie came into the world during the "Roaring Twenties," four years after the Volstead Act brought the prohibition
of alcoholic beverages to America and four years before penicillin was
discovered.

Calvin Coolidge was president, replacing Warren G. Harding who
had died in office a year earlier of a heart attack. Perhaps worried that the
same fate would befall him, Coolidge took a two- to three-hour nap each
day. His restful habits didn't seem to hurt the nation's economy, which
was in the midst of a great business boom. Coolidge once declared, "The
business of America is business," and indeed, from 1921 to 1929, the
gross national product soared from $74 billion to $104.4 billion. The buying power of a skilled laborer swelled 50 percent during that period.
Bricklayers' wives began wearing silk stockings and the bricklayers themselves bought touring cars.'

Al Munger had moved the roughly 50 miles from Lincoln to Omaha
because it would have been problematic to practice law in his hometown
where his father was the only federal judge and a dominant force in the
community. Charlie's father practiced law in the same building in downtown Omaha from 1915 to 1959, taking time out to serve as an assistant
attorney general and to fulfill his obligations in World War I.

The Munger family history stretched way back in America, reaching
to an ancestor who was among the earliest British settlers in New England. The Munger name derives from the German word monger, a person
who sells some commodity, such as fish or iron. At some early point, the
Mungers moved from Germany to England and thereafter were increasingly Anglicized.

The first Munger arrived in America in 1637; Nicholas was a 16-yearold freeman from the county of Surrey, England. He settled in Guilford,
Connecticut, where the family farm proved boggy and unproductive, so
the Mungers moved from one disappointing farmstead to another, hoping
to improve their fortunes. Over time, the family migrated West, with
some landing in the Territory of Nebraska.