Investing w/ Uncle Warren & Cousin Jimmy

The Buffett is Closed.

It wasn't all that long ago that the founder of Margaritaville passed away. I wrote a long and admiring tribute to him when he died. I have been a fan since high school, and only grew in my admiration for his music, his persona, and, as we both aged, his phenomenal business sense. At the time of his death, his personal net worth was estimated to be around a billion dollars. His trademarked business empire, "Margaritaville," was still expanding - buying and developing resorts, restaurants, retirement communities, beer brands, clothing, and of course, blenders. Much of his income came through licensing deals (ironically, not unlike the current White House occupant).

Jimmy Buffett - Death of a POPULAR Poet | TX Outlaw Writers

“Despite the pain, he smiled every day. He was kind when he had every excuse not to be. He told us not to be sad or scared, but to keep the party going. And as much as I’d like to use that as an excuse to drink myself into oblivion worthy of his literary heroes, I know it’s not what he meant… ”

Texas Outlaw WritersChris Newlin

Recently, another Buffett decided to wrap up oversight in his massive business empire, though he is still very much alive. Widely considered the best investor of all time, Warren Buffett retired as CEO of Berkshire Hathaway, the massive insurance holding company where he accumulates stocks and other investments to create one of the world's leading corporate conglomerates. (Warren will remain as chairman.) In 2023, Warren lost his longtime business partner and good friend, Charlie Munger. Losing Charlie, and the realization that he is 94 years old (and mortal), he is ready to release control of the company. "I've reluctantly discarded the notion of my continuing to manage the portfolio after my death — abandoning my hope to give new meaning to the term "thinking outside the box." And he said that in his 2007 "Chairman's letter."

Jimmy B. started out street busking and playing in bars in New Orleans and Key West. His early ventures were financed with his music royalties and performance earnings. He was one of the first musicians who realized that he wasn't just a singer/performer, but that he was a "lifestyle brand." And that lifestyle was all about taking it easy on a boat or a beach or in a bar somewhere. The irony was that his friends, family, and business partners would tell you that no one worked so hard to appear so laid back.

Warren was a Depression kid, born in 1930 in Omaha, Nebraska. His father was a stockbroker and later a Congressman, so while things were tight around them, they were mostly comfortable. His mother was cold and could be abusive and condescending; Warren and his sister would later suggest that she was bipolar or that her behavior was the result of migraines. In terms of development, they would both seek their mother's affection their whole lives. Warren would throw himself into "business" early on - he would buy six packs of Cokes from his grandfather's store and sell them individually to kids in the neighborhood at a markup. He liked the taste of profit, so he expanded into packs of gum, used golf balls, and magazines. By high school, he had a paper route. He saved enough of his earnings to buy a pinball machine with a friend, and then a few more. They would put them in neighborhood barbershops and split the profits with the shop owners. He would sell his stake in the business for $1200 - a lot of money at the time.

He bought his first stock at 11 (it lost money, then rallied. He sold quickly, making him $2. The stock would gain another $150, so he learned his first lesson: "buy and hold.") He hung out at his dad's office, watching the brokers, reading the ticker tape. He attended the University of Nebraska and later enrolled in Columbia Business School. (side note: he did not get into Harvard. Yup. The most successful investor in history - and one of the world's richest as a result - didn't make the cut at Harvard.)

Warren and Jimmy's paths would cross when, in the mid-80s, Warren's sister took an interest in tracing her family's roots. DNA testing and online genealogy sites were non-existent then, so she just started writing letters to various Buffetts. Jimmy's letter sat on his desk for two years before he finally picked up the phone. Jimmy and Doris (Warren's sister) hit it off. She invited Jimmy and his family to travel with her on a research trip to Norfolk Island, "a remote speck of land in the Tasman Sea between Australia and New Zealand where there happens to be a large population of Buffetts. Norfolk was settled in 1856 by descendants of the men who had participated in the 1789 mutiny aboard HMS Bounty, according to local historical societies. The mutineers' families relocated from the more remote Pitcairn Island, led by one John Buffett, a shipwright who had originally settled on Pitcairn in 1823. There are 46 Buffetts on the Norfolk electoral rolls out of a permanent population of 1,574, according to Grant Tambling, the island's administrator, and 12 Buffett children enrolled in the island's only school." -WSJ

Imagine his excitement to think he might have descended from mutineers on the Bounty. Alas, no genealogical link was found there, but another link was established. The travelers really enjoyed each other's company, and Doris would introduce Jimmy to Warren upon their return to the States. And that was all it took. They began to address each other as "Uncle Warren" and "Cousin Jimmy."

“Yes, I am a pirate,
two hundred years too late.” -Cousin Jimmy

Warren and Jimmy Buffett became lifelong friends, and I find that fun and fascinating.
"Well, OK Chris. But why?"
I guess that it's just so rare and refreshing that a couple of guys in the top .1% (maybe .01%? are/were decent, thoughtful gentlemen who evidently had/have a lot of respect for their customers, friends, and family. And while they undoubtedly enjoyed a good deal of luxury in their lives, it is clear that they found meaning in their chosen vocations, friends, and led a life well-lived.

Both men were driven, played the long game, and succeeded beyond every measure.

Cousin Jimmy played on the streets for tips. His first album sold all of 324 copies. On a consolation trip to Key West with buddy Jerry Jeff Walker, he found himself and a unique, original style of music. The Gulf & Western sound suited him and was a perfect vibe for his college and beach bum following in Key West. He put out album after album and toured constantly. When he saw tourists wearing homemade T-shirts with his name spelled wrong, he started selling merch in a small shop on Key West and expanded it to mail order. He shrewdly trademarked his famous song title "Margaritaville," and built much of his empire around that brand. 150 restaurants and bars, more than 30 resorts and hotels, casinos, cruise lines, frozen food products, and even retirement communities.

Uncle Warren, the paper boy in Omaha, Nebraska, is worth around $160 billion (in 2025.) In 1965, he had already had great success with a few investment partnerships. He then took control of Berkshire Hathaway, a textile manufacturing company that was in decline. It was going to be a quick flip, but he could not get a good price for it. The textile side of the business slowly died, but he decided to use it as a holding company for his other investments.

During Warren Buffett’s reign as the leader of Berkshire, the company returned roughly 2,000,000% on its initial value. That's 20,000 to 1. Simple, really: invest the company’s capital in an increasing number of prosperous enterprises and without a lot of risky borrowing. Boom. So easy, right?

It should be said that for most of Warren's time at Berkshire, he had a partner, Charlie Munger. Munger is often given equal credit for the company's success; he shared responsibility for many investment decisions. Charlie came off as a bit of a curmudgeon, and he was glad to have Warren be the face, voice, and smile of the company. Munger died near the end of 2023.

Generous Buffetts

I met a young woman who had worked at Cousin Jimmy's corporate office. She confirmed that Buffett was as good-natured and charismatic as you would assume he would be. She had been charged with answering the various requests for donations, charitable appearances, donated merch, and autographed pictures for charity auctions. She claimed that she talked him into forming a foundation as a better system to handle the thousands of requests that they would get. He also set up charities for environmental causes. A dollar of every concert ticket went to charity, as did a portion of merch sales. "Parrothead" clubs organically sprouted up all over the country. (His fans were often referred to as parrotheads - they tailgated or attended concerts in beachwear, Hawaiian shirts, and foam or feathered hats, many times with parrots on their heads or shoulders.) Jimmy had trademarked that term, too. Rather than squabble with his own fans over the use of his trademark for their tribal identity, he insisted that the various clubs register with him. Instead of a license fee, they were to hold at least one charity event per year and report their donations. Clever. Fun. Charitable.

Uncle Warren was a co-founder of The Giving Pledge with (then married) Bill and Melinda Gates. This was a promise from billionaires to give the majority of their wealth to philanthropy. He has already donated 39 billion to the foundation. Early on, Warren had made it clear that he did not want to pass on billions to his 3 children. He would leave them "enough money so that they would feel they could do anything, but not so much that they could do nothing." For a college graduate, he figured "a few hundred thousand dollars" sounded about right.
(BTW, Warren recently decided to pull future donations from the Bill and Melinda Gates Foundation and instead allow his 3 kids to direct charitable giving. "I feel very, very good about the values of my three children, and I have 100% trust in how they will carry things out." Each has their own foundation, so he will direct his fortune to their charities.

Buffett Air

Warren is known for his frugality. Yet he bought a (used!) company jet to fly from board meeting to management meeting, from potential investment property to shareholders' meetings. His partner Charlie Munger (whose idea of extravagance was to ride a nice bus) chastized him for the waste. Warren named that first small plane "Indefensible" because I felt guilty about flying privately. I quickly realized the value of having a private jet as a business tool for utility and convenience, and a few years later, Berkshire purchased a larger jet that I named "Indispensable." It wasn't long before he invested heavily in a company that offered fractional shares of business jets, and he now uses that service.

Jimmy, who loved to fly almost as much as he loved sailing. was certified as a commercial pilot and rated on several aircraft (including small jets, multi-engine, land and sea aircraft). While flying off of Jamaica in his vintage Grumman Albatross, "Hemisphere Dancer," he was famously shot at by local authorities who mistook it for a drug smuggler's aircraft. C'mon! He fancied himself a pirate, so that comes with risk, doesn't it?

Come back, come back, back to Jamaica
Don't you know we made a big mistake-a?
We'd be so sad if you told us goodbye
And we promise not to shoot you out of the sky.
-Jamaica Mistaika, J. Buffett

Rock Stars

Cousin Jimmy has played stadiums that seated upwards of 40,000 people, and was also known to show up unannounced at tiny beach bars and play for the locals or a handful of tourists. (It was not uncommon for him to play impromptu fundraisers if locals had been caught in a storm or needed something for local kids.)

Uncle Warren was also referred to as a rock star, though he seldom sang much. His annual shareholders' meeting became THE ticket to have in the investor world. It is held every year in... you guessed it, Omaha, Nebraska (where he still lives in the house he bought for $31,500 in 1958). The shareholders' meeting is known as the "Woodstock of Capitalism." Audience members hang onto Warren's every word, hoping to hear some magical get-rich formula or the stock pick of the century.

More than once, the emcee has announced "Mr. Buffett" at Berkshire's Annual Meeting, and out walked Jimmy. He might sing one of his songs with lyrics rewritten to match the occasion. Warren took a turn at performing once, welcoming Jimmy for his "Cheeseburger in Paradise" restaurant grand opening in Omaha. Warren sang "Has Anybody Seen My Gal?" while playing ukulele. There was not a call for an encore.

Politics

The Buffetts tend to keep political discussion out of their public appearances... up to a limit. These are smart business folk and they know that being overly political only serves to cut their customer base in half.

But these are challenging times, and they both recognized their obligations as leaders and rich dudes.

Cousin Jimmy rarely mentioned politics with general audiences on his summer tours. However, he supported environmental causes and other progressive issues for years. It was not uncommon for him to appear with Democrats at rallies and fundraisers. His part-time residence in Florida and his environmental conscience put him very much at odds with DeSantis and Trump. During the reign of Trump I in the run-up to the 2018 midterms, as DeSantis mounted his first campaign for governor, JB appeared at a large rally in West Palm Beach. This was directly across the Intracoastal Waterway from Mar-a-Lago. He adjusted the lyrics of his popular "Come Monday" when he sang:

Come Tuesday, things will change.
Come Tuesday, we’re making a change.
It’s been two insane years
and it’s time to really switch gears..."

Away from his paying audience, Jimmy participated in fundraisers for several Democratic candidates and causes, including Hillary Clinton, Governor and Senator Bob Graham, and the "Save the Manatee" foundation (among many others).

Warren is even more careful in revealing his political leanings. And yet... and yet...
In an oft-quoted bit from Warren, "The 400 of us <Forbes 400 list> pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you're in the luckiest 1 percent of humanity, you owe it to the rest of humanity to think about the other 99 percent."

Hmmmm. More taxes? Doesn't sound like a Republican theme to me! And then this: "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning."

Yeah, that's not going to get you a good table at Mar-a-Lago. And finally:

My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery. (For starters, the odds against my 1930 birth taking place in the U.S. were at least 30 to 1. My being male and white also removed huge obstacles that a majority of Americans then faced.) My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. I've worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate's distribution of long straws is wildly capricious. -from Warren's letter regarding his "Giving Pledge"

Oh Warren, Warren, Warren. You'll never get to cheat at golf with Herr Trump speaking like that.

More recently: "<Trade> “should not be a weapon... There’s no question that trade can be an act of war… and I think it’s led to bad things."

Notice how there hasn't been a backlash against Warren? They know he's right. And he's richer than (almost all of) them. It's the one thing that they respect more than anything.

Investment Advice

If you've made it this far, you want a payoff. You are hungry for the secret sauce. So, some tips from the greats:

• "In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending." -Warren on CNBC. He also referred to Bitcoin as "rat poison squared" at a shareholder's meeting.
  -Warren
• “We got to roll with the punches, play all our hunches.
  Make the best of whatever comes your way.
  Forget that blind ambition, always trust your intuition
  Plowin' straight ahead, come what may.”
  -Jimmy, "Cowboy in the Jungle"
• “You only have to do a very few things right in your life so long as you don’t do too many things wrong.” - Warren. This was a shortened version of a theme that his partner, Charlie Munger, often talked about: "It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” And:
  "Avoid crazy at all costs. Crazy is way more common than you think... It’s easy to slip into crazy. Just avoid it, avoid it, avoid it.”
  -Munger
• “Quitting doesn’t enter my mind.”
  - Jimmy
• “Management in place." This is the advice that Warren gave Jimmy when Jimmy was looking for companies to invest in. "Find a good business that makes sense, and make sure there are good people running it.”
  -Warren, to Jimmy (and others)
• “Never invest in a business you cannot understand. Be fearful when others are greedy.”
  -Warren, famous for NOT investing in the wildly popular Enron company. He never fell for Theranos either.
• "People who think too much before they act don't act too much."
  -Jimmy

And finally:

“<Jimmy> made everybody feel good, particularly me.”
-Warren, remembering Cousin Jimmy

“If life gives you limes, make margaritas.”
- duh, who do ya' think???

Oh. The DNA tests finally came in, years after Doris did her first genealogical research. They were not (recently) biologically related. It didn't seem to matter. The Force was strong between these two.

It took a lot for your humble narrator not to mention Trump (at least not too much.) It was crazy-hard. I mean, did you see that he...
I can't. I just can't.
Doesn't that deserve a tip this week? 😉😄