Chapter 4. The Insatiable Curiosity to Know Nothing Worth Knowing (Oscar Wilde Was Right)

 

I particularly liked the "Dean Man's Curve" commentary [Jan and Dean wrote the song, "Dead Man's Curve," and I took Warren's message to be an intentional reference.]

 
 --Warren Buffett to Janet Tavakoli, September 27, 2006

Warren Buffett has nothing against hedge funds, provided the price is right for the risk. After our lunch in Omaha, Warren showed me the letter he sent when he made his rejected bid for Long-Term Capital Management (LTCM). Along with Goldman Sachs and AIG, Berkshire Hathaway made a $250 million bailout bid for LTCM and would have provided an additional $3.63 billion of funding.[40] Instead, the Fed engineered a bailout with a consortium of 14 banks and investment banks; only Bear Stearns famously refused to participate. LTCM had once shorted shares of Berkshire Hathaway—a money-losing bet.[41] That is what happens when eggheads crack.

My former Merrill Lynch boss, the late Edson Mitchell, was the banker who oversaw Long-Term Capital Management's initial fundraising.[42] One of my Salomon training classmates, Swiss-born Hans Hufschmid, a partner and co-head of LTCM's London office, had borrowed $14.6 million to increase his stake in the fund.[43] In 1993, Salomon denied rumors that Hans's compensation was as high as $28 million. Perhaps it was only $20 million. Hufschmid decamped for LTCM, because he thought it was a better opportunity.[44] John Meriwether was a managing partner ...

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