The Warren Buffett Way, + Website, 3rd Edition

Chapter 1

A Five-Sigma Event

THE WORLD’S GREATEST INVESTOR

Brace yourself,” Buffett said, with a sly grin. He was sitting in a Manhattan living room on a spring morning with one of his dearest and oldest friends, Carol Loomis. A New York Times best-selling author and an award-winning journalist, Carol is senior editor-at-large at Fortune magazine, where she has worked since 1954, and is considered to be the magazine’s resident expert on Warren Buffett. It is well known among the Buffett faithful that she has also been editing Berkshire Hathaway’s annual reports since 1977.

On that spring day in 2006, Buffett told Carol that he had changed his thinking about how and when he was going to give away his fortune in Berkshire Hathaway stock. Like most people, Carol knew that Buffett, after a small allocation to his three children, was going to leave 99 percent of his wealth to charity, but it was always thought it would go to the Buffett Foundation established by his late wife, Susan. Now he was telling Carol he had changed his mind. “I know what I want to do,” he said, “and it makes sense to get going.”1

So, shortly before lunch, on June 26, 2006, Warren Buffett, who was then the second richest man in the world, stepped up to the microphone inside the New York Public Library. The audience—hundreds of the wealthiest people in the city—greeted him with a standing ovation. After a few brief words, Buffett reached inside his jacket pocket and pulled out five letters. Each one announced ...