21) Mary Buffett: Value investing and stories about Warren Buffett.

Financially Free Podcast

Today I'm interviewing Mary Buffett on value investing and also stories about Warren Buffett which you probably have never heard before! I certainly enjoyed interviewing Mary. On a personal note, I was not expecting that she would be so cool. I learned, once again, a great lesson: "There's no better investment than being a great human being; it costs nothing, and it pays off great dividends." Thank you, Mary.

Mary Buffett

Ney Torres: [00:00:00] Hello everybody welcome to the show. Today I have the honor of interviewing Mary buffet. How are you Mary?

Mary Buffett: [00:00:06] I'm great. Thank you.

Ney Torres: [00:00:08] Hey, before we start I really wanted to thank you for your time. is really , a big honor. I started studying, investing with your books, and I really appreciate it and it comes to full circle now.

Now I'm talking to you and thank you so much for this opportunity.

Mary Buffett: [00:00:21] My pleasure Ney. Honestly. Thank you.

Ney Torres: [00:00:24] Can we start, for the listeners that maybe haven't read the books, who is Mary buffet?

Mary Buffett: [00:00:29] Well, I was, a singer, song writer in the music industry since I was 14 years old. And actually I was living at the time in Laguna beach and I was making, I had a business, I was making skateboards at the time with Tony Alva, who was the world champion skateboarder. And, I met Susie Buffett, Warren, Peter sister. So Warren has three children, Howard, Susie, and Peter and Susie lived. Down there. And we became really great friends.

And she said to me, Oh, you've got to meet my brother. He's a musician, and you got to talk to him and help him. And I thought, Oh! That's the last thing I want to do is meet another musician. I had gotten out of the business, you know? But as it turns out, we met and immediately fell in love and we met and married in almost three months.

It was just, yeah, it was really like that. He was living in San Francisco. He had just rented a house that was too big for him, and I was working with the company that was based in San Francisco and I was going up there and he said, you know, stay at my house. And I did. And I saw his studio and we talked all about his business.

And I said, you know what I'll I'll be your manager. I actually, you need help. So, I moved up to San Francisco and actually Susie buffet, his mom who had an apartment near us, I stayed at her place. And, And then shortly after Peter asked me to marry him and I said yes, and that was that.

Ney Torres: [00:02:06] I can not believe that.

Well, I've never heard his story before.

Mary Buffett: [00:02:09] Yeah. And I really, at the time, I had grown up in California, well, I was born in Chicago, but I really grew up in California and I went to Beverly Hills high school. Cool. So at that time, the only thing I knew about his father was that he owned see's candy and bluechip stamps.

I think maybe he hadn't owned blue-chip. I think Charlie (Munger) did. But, you know, and I thought "Great! Free candy", you know, little did I know there was no free candy with Warren, but, I had grown up around plenty of people whose parents were wealthy, but you know, I didn't see him as a millionaire... It was... he didn't live like a millionaire.

It was never really discussed.

Ney Torres: [00:02:50] You know, and I will love to take this opportunity for this interview to just address that, because I find that incredibly fascinating. You would believe that being around Warren, you start absorving all of this... just how to analyze businesses, pick up stocks, but turns out like Peter was not interested in that.

It looks like none of his sons and daughter. It turned out they didn't like it. I mean, maybe they didn't even know what he was doing. Right?

Mary Buffett: [00:03:17] Well, you know, it's, I think. No Peter loved music, and that's what his mother, Susie really, you know, stood behind him. Howie (Howard Buffett) , you know, later wanted to learn more about the business, to be honest with you.

I think Susie ,little Susie, was probably the most qualified, but. At the time, you know, women really weren't thought of in the same way as taking over, but it's a pretty big shadow to walk in, you know? To be honest with you, it would be very difficult to be, you know, Warren's child and get into the same business that he was.

Ney Torres: [00:03:57] Yes. Yes, I agree. I agree. He's considered the best investor in history. Actually.

Mary Buffett: [00:04:03] Better. Yeah. 55 years of amazing returns. Nobody's done that.

Ney Torres: [00:04:08] Could you told us a couple stories? For example, I bet, you have personal stories about the Nebraska furniture Mart. He went and bought this huge furniture Mart.

How did it looked like? What happened then? How do you guys find out?

Mary Buffett: [00:04:23] I remember. That when we... cause we went to Omaha several times a year for vacations and stayed at his house and so on. And the Nebraska furniture Mart was a very successful, very large furniture store run by Rose Blumkin, who was a Russian Jewish, Russian immigrant, who didn't read or write.

But she certainly knew how to sell carpet and, what she would do, would she go to the suppliers and she would say, you know, I'm going to buy all of your inventory, but you got to give me a really great price. And then it would allow her to turn around and offer, you know, rugs and furniture and everything.

At a really decent prices, and we just remember that people would drive from other, you know, from Iowa, from different States. You know, they drive to Omaha just to shop at the Nebraska furniture Mart , and it was run by her family, her sons. Still is run by the family. And, I think he, it was his birthday and, he went to the Mart and met with Mrs Blumkin and said, I want to buy, I want to buy the store. And she said, I think it was something like 65 million and not a penny less. And he's like, "Yes!". And shook hands on it. Never looked at the books, understood the business was, you know, really had a, had a lock on everything and went back and got her check and made sure that the family was gonna still run it because he doesn't want to change management.

Ney Torres: [00:05:59] So that was, that's how you lived it? Well, cause that's what we know now. But, back then? Did you just know he wrote a check for $65 million and walked into the store?

Mary Buffett: [00:06:09] No! No. We, we never heard about the price. Later, of course I found out, we just, you know, knew that he bought it and we were like, "Oh", you know, a "great", haha it's just like one time he called me and, we were in San Francisco doing our music and he's, he called me and he was like, "Well Mary so, well, nobody is getting in my business, so I thought I'd get in yours hahaha. I bought ABC" and I was like, "Oh, great, I'll, I'll, I'll tell Peter" and I got off the phone. I said, "Peter, dad, your dad called and he bought ABC. I wonder what that is?". And Peter and I were like, A... b... c... And then we just looked at each other, realize "Does he mean the network?", you know? And, that was really when people, of course he was, he bought it with cap cities, Tom Murphy. and, that was really the first time people started to know who Warren was. Because that was a pretty big, obvious purchase. You know, there were only three networks still at that time.

That was before cable really took off.

Ney Torres: [00:07:18] So it's kind of a monopoly kind of economics. But how did you and Peter feel when you find out? "Oh! He bough the network".

Mary Buffett: [00:07:27] We where surprised. I mean, for us. I, you know, my first reaction was great. You know, we write music. ABC has a lot of shows that we can write the music introduction to, but that of course never would happen with Warren.

You never got, you never got a break. I mean, I went to New York. And Tom Murphy had organized for me to have a, you know, a whole, I went to ABC and met Diane Sawyer, and I went and met everybody. But, and I, I talked to the producers and gave them Peters in my music. And, but it never would have happened because Warren didn't believe in.

you know, in, in That he didn't believe in helping.

Ney Torres: [00:08:13] Yeah, yeah, yeah. I understand that.

Mary Buffett: [00:08:15] It was very difficult actually because people who knew him and then also always assumed we were so rich and didn't need the money. But. In fact, you know, we were running a business and, so it made it more difficult.

The, the, you know, people's opinion was different than the reality.

Ney Torres: [00:08:34] And I bet if anything that made it made it harder. Cause you know, if you start doing something successfully, you're, you're the daughter in law, the owner or one of the owners.

Mary Buffett: [00:08:42] Yeah. Yeah. Well. We never worked for any of his companies. We never got free candy.

Ney Torres: [00:08:50] It's funny, the other day you were telling me that you went to Nebraska furniture Mart and you didn't get a discount. If it wasn't for Mrs B?.

Mary Buffett: [00:08:58] That's right. Yeah. Mrs B would give us a discount and, see's candy, we would buy every year for the people we worked for. And, at the time, Chuck Huggins was the president, and Chuck would give us a discount, but everybody would say, you know, don't tell Warren that we're giving you a discount.

Ney Torres: [00:09:17] One of my question is as Warren, as a father in law, He looks to be really radical. I remember seeing this documentary once where he mentioned that he got , that "innerscore card" , from his dad, right?

Mary Buffett: [00:09:30] Right. He did have great respect for his father and his father was a Republican. And, it wasn't until grandpa died. That Warren changed to being a Democrat because Susie had a lot of influence on Warren, and she was, you know, working for equality for blacks and she was involved in all kinds of things that were very, you know, very, progressive.

Ney Torres: [00:09:57] And that opens the door to my questions about Sussie. I'm really interested in to know the woman behind Buffet. Becuase I don't think we know much about her.

Mary Buffett: [00:10:08] Warren admits to the fact that if it wasn't for Susie, he could never have been who he is.

She was his absolute, partner in life and she, you know, basically raised the kids and did her job, and left him to do his. Because, he really worked all the time. So it was, it was amazing. And Susie was one of the most generous kind people that you would ever want to meet. she always was helping people.

she was an amazing, funny person, a total free spirit. very, very kind of opposite of Warren, but very, you know, she had a lot of friends and. Yeah, she, she was, she was very different than when she left Omaha, as everyone knows now . She was a singer, and she sang at a place called the French cafe in Omaha.

And the, person who was the, not a waitress, but she, you know, sat you down. It was Astrid and Astrid and Susie became friends. And Astrid, I believe, had taken care of a few other older men, making sure they were okay. And when Susie left, she asked Astrid to move in and take care of Warren. And that's what happened.

Really remarkable.

Ney Torres: [00:11:44] Really remarkable. And he worked for them.

Mary Buffett: [00:11:46] It did. A lot of people didn't understand it. And we would always have, you know, a few weeks at Christmas and new year's in Laguna beach together. And Susie would go to Omaha and stay with her best friend Bella Eisenberg and, go out to lunch with Astrid , and Susie and Warren talked absolutely every day.

There is nothing that she didn't know about.

Ney Torres: [00:12:08] I don't know if I read this in the biography of Warren , or maybe somewhere else. I'm not sure how true it is, it's just my memory. But I could swear that U2 Singer Bono spend a lot of time with her and said she was the "highest emotional intelligent person" he had ever met or something between those lines.

Mary Buffett: [00:12:26] Yes, I would agree that that's a very good, a good way of putting it emotionally. She was just an amazing person. . .

Ney Torres: [00:12:35] We have some questions from the listeners. Now... can I start asking you?

Mary Buffett: [00:12:39] Sure.

Ney Torres: [00:12:40] Awesome.

Let's shoot.

How is Warren still alive after drinking seven Cokes a day?

Mary Buffett: [00:12:45] Well. Add to the seven coke's, McDonald's hamburgers and McDonald's breakfast and Bronco burgers and Sees candy. He thinks, you know, he always thinks that it's, it's all of the, all of the, whatever it is, and the Coca Cola that keeps him alive.

So I honestly, I don't know. And he. I mean, when you go to dinner with him, you know, whether it's at the steak house, he literally will take the top of the salt shaker off and pour salt on his, on his steak. So everything that he eats, and once someone asked me, David and I were doing our first book interview with Bloomberg, and I thought for sure they were going to ask me about the zero coupon bonds, which is a really kind of complicated thing that.

Warren had just bought and I was waiting. And you know the first day, that question, he said, so what does Warren eat for breakfast? I was like, what? And it just so happened that he had been to our house and I made him breakfast and it was two scoops of Vanilla ice cream, some chocolate syrup dusted with malted milk.

Ney Torres: [00:13:58] What?! Are you...? Wow. I didn't know it was that bad cause I'm pretty bad, I love Coca-Cola and all of that. So I now have an excuse to keep doing it. Thank you very much.

But... for breakfast... ice cream. That's wow. .

Mary Buffett: [00:14:09] Yeah. He is basically a child. A kid. He eats like a kid.

Ney Torres: [00:14:14] Yeah, I bet that's where he gets all his energy too.

You know a lot of sugar just to Brian and run around.

Mary Buffett: [00:14:20] She has sugar and caffeine. Yeah. Sack

Ney Torres: [00:14:22] How do you think Warren worked all day in the attic for six years with his family downstairs? I asked for other investors like I do, cause it's very hard working at home, especially doing the kind of mental work he did, and the kids downstairs running around.

Is he able to just disconnect completely or was it a big house?

Mary Buffett: [00:14:43] well, I mean it was a decent size house and of course the attic was separate, but then he also downstairs, he had his. T V room and his room where he's his study and you know, he always had the phone, the television and reading, and he could block anything out.

I mean, we always talk about the time that Warren was away. I think he was in New York with Katherine Graham, who owned the Washington post and he did too, at the time. And, and during the time that he was away, Susie, took up the, the, the carpets and there were hardwood floors and painted the whole house and literally changed everything.

So he would always park in the garage, come into the kitchen, grab a Coca Cola, then walk through... to his den. And so we were all really waiting for him to, you know, see that the entire house had changed. I mean, there weren't any carpet. I mean, it was totally different. And that day he, he came in and did the same thing, went to his den, and we all kind of went in there and we're like, "Well?", and he said.

" What?"

" Do you see anything different?" I mean,

He's like, "Nope". You know, we're like, "the whole house has changed since different color. There aren't any carpets".

He absolutely didn't even have a clue. It wasn't, you know, his mind was someplace else.

Ney Torres: [00:16:10] Maybe he's just wired differently, obviously, right? , dont you think?

Mary Buffett: [00:16:14] Well, yeah, I mean he's in his head. You know , it's like another time he and Charlie Munger where in New York and they were walking down the street. They were talking, and Charlie realized he had to catch a flight and he just went over and got a cab and left and didn't even say anything.

And it wasn't, but for another block or something that Warren realized wheres Charlie? you know, so they're, they're just in their head.

Ney Torres: [00:16:42] Is Chralie like that? Did you have a chance to meet Charlie?

Mary Buffett: [00:16:44] Oh yeah. Charlie and his wife used to come down at Christmas time cause they were in California and Nancy and we'd always have fun with them.

And then they came to San Francisco and Peter and I showed them the recording studio. He had a lot of fun in there. And yeah, Charlie is a great guy. He's not like, you see him at meetings. He's not as quite as tough. He's actually very sweet,

Ney Torres: [00:17:11] they hit it off. It's, it's amazing how they're very logic.

Mary Buffett: [00:17:16] Yeah. Yeah. Charlie is one of the smartest guys, and he was a great balance for Warren. , all those years. They both studied under Benjamin Graham. Not at the same time. I think Charlie went there first and then Warren went a year later. so yeah, they, they both, they're great compliment.

What else can I say? You know, they've been together, Charlie. I mean, back in the day in, in the sixties, in 69. Warren realized that, he saw a bubble in the, in the market, and it reminded and resembled the 29 market and it basically stock prices, so-called at that time, the nifty 50, you know, so if you own those nifty 50 stocks, it was impossible to lose.

But he noticed that they were so high. Costs are preposterously high, that, that it would be virtually impossible for those companies to earn enough in the future to justify their price. So in 1969 he sold all of them and he, we went to cash and Charlie stayed in the market but Warren, you know, he went all to cash.

And he sat on that cash until 1973 so for years, he just, you know, researched companies. And at 73, when the market tanked, he stepped in and bought companies at bargain basement prices. And Charlie lost a lot of money at that time. So it was after that. In the sixties that Charlie, really became more, more interested in what Warren was doing.

Ney Torres: [00:19:00] You told ones that I need interview, that you went downstairs in the basement were Warren kept a lot of the letters he had written and you had a chance to read them and that you got a chance to see how he thinks. What did you find there?

Mary Buffett: [00:19:12] Oh goodness. you know, they were, they were letters to his.

Early stockholders and family, and every year at Christmas time, that's when he wrote his annual report is his letter to the annual. And he had lot of a lot of those. And you know, what I learned, just going through those letters were things like, you know, the characteristics that he looked for. In companies that, for instance, the three characteristics I can think of, or you know, companies that have been around a long time because he knew that the product that they would sell would be the same 10 years from now.

And that makes the earnings more predictable. So for instance, Coca-Cola, Kraft foods, Wells Fargo, Wells Fargo has been around since the horse and carriage days, for goodness sake. A lot of the companies. Are over a hundred years old. So that was one thing. And the other thing was that he understood what the companies did.

it wasn't likely that a company would have to morph into a completely different kind of business model in order to survive. You know, an example would be union Pacific. You know, the railroads, they're, you know, their railroads not going to change. He loved railroad. And then the other example I think was that the company had to have some kind of monopoly, or it would be the low cost producer in its category, like Nebraska furniture Mart or Costco.

And in terms of a monopoly. You know, most people don't realize that "bandaid" is a registered name by Johnson and Johnson. And even if you don't buy the Johnson and Johnson bandaids, when somebody gets a cut or something, you'll say, can you get me a "bandaid"? You know, you still call it a "bandaid". And that that really owns a piece of the consumer's mind. So those were the kinds of things I learned and also Warren gave me the intelligent investor. He's like, Oh Mary, you should read this book. Cause he knew I was involved in business. For Christmas I remember nobody knew what to get him. And I was just. And then I realized, Oh, I'll give him our, our business of returns.

You know, I'll show him our balance sheet and I put it in a nice little plastic cover and Oh my gosh, that was the best present he could ever have.

Ney Torres: [00:21:46] so you read the intelligent investor, you realize warring was buying differently than, than Benjamin Graham used to. Were you ever inclined to invest more like Benjamin Graham or, or just stay with the big companies.

More predictable.

Mary Buffett: [00:22:00] Yeah. I mean, Benjamin Graham had a wonderful, you know, ideas about companies and evaluating them and so on. But he, he really didn't hold on to them for very long. Well, sometimes it would just be two years, you know, and then he'd sell it at a, at a profit. presumably. but it was Phillip Fisher.

Other people that worn, studied and that under made him understand that the longterm was really the thing

Ney Torres: [00:22:33] you don't like or you never tried. And that man's or this dark, obscure stuff that nobody knows of.

Mary Buffett: [00:22:40] They basically, Benjamin Graham taught him that accompanies that had a durable competitive advantage over other companies.

We're actually the first to recover after the great depression and the, I think that was really useful in, selecting the long term prospects that Warren was buying. especially in 73 when he had all that cash.

Ney Torres: [00:23:06] What will you say is your circle of competence, Mary?

Mary Buffett: [00:23:10] Well, but you know, it's changed. I mean, my circle of competence obviously was the music and entertainment business for years.

And, I would say now is probably financials. It's banks and, consumer monopolies, consumer goods really things I understand, you know, I don't understand tech, for instance very well, but, You know, I did buy Apple and Lauren loves apples. One of his biggest holdings. But you know, he loves Apple because, you know, it's a great company.

I mean, it has very low debt. It makes a great deal of money. it hits all of the things. That he loves. So it has all of those business characteristics. I guess that's my circle of competence now. I love banks. As a matter of fact, on buffet online school, I do a webinar every month with Sean and a few other people, and I think a couple of webinars ago, we talked about banks.

And why they were good investments. And we went through several different banks and showed their earnings. And last, the one I did last week, we talked about companies that were going to survive the Corona virus and why? And the effect it's had. So they use those...

Ney Torres: [00:24:36] sorry,

can you those again where people can find you?

Mary Buffett: [00:24:39] if you go to buffet online school, you can join and, I think it's that easy. Once again, I'm terrible on the computer, so I never go on it. Rarely do I do it. but you can just go to buffet online school and asked to join. And, it's not that expensive. And then you get all of the webinars and they're there.

They stay on there so you can listen to them again. And again,

thank you very much. And one last word for all the women listening. I am really adamant on asking women listening to the show to share this too. I do think that we should promote investing more in women. What can you say as a woman to women that are listening right now and thinking about investing?

I think I, first of all, I think that women are probably better investors than men because they understand products and brands. And you know, women who got to realize we live longer than men. We don't get paid as much as they do for the same job. And, we generally will spend 13 years of our lives as an unpaid caregiver to children, our parents, and our husbands.

And so it's more important that a woman take care. You know, I always say a man is not a plan. So we have to be independent and even if you're married, I would have my own investment portfolio and save my money. I always tell my daughters, you know, Oh you love that cashmere sweater.

Well that $500 in 30 years, they cant stand when I tell them these things, but I'm like, you know, if its compounding at 20% that's going to be millions of dollars. So think about that. When you want to buy that sweater, when you want to spend $500 it's really that. It's a way you have to change your way of thinking, and that's what Warren does.

You know, he thinks about money in a different way because when he's, he knows, like I used to say, when he drove his old VW beetle, people thought he was just really cheap, but he knew the $20,000 for a new car back then in 10 years, if he was compounding over 20% would be worth in 30 years. It would be worth.

9.9 Million dollars, and that was just too much to pay for a car, you know? So, that's the way you have to change your thinking as a woman and teach your children, at a young age that saving some money and earning some money, even if it's just cleaning up your room or small things, earning money.

And. Saving it and putting it away is a good thing.

Ney Torres: [00:27:22] Thank you very much for your time, Mary. It's been a pleasure.

Mary Buffett: [00:27:24] Oh, you've been wonderful. It's been my pleasure. Any any time Ney.

Ney Torres: [00:27:29] Thank you very much. See you in the next occasion.

Mary Buffett: [00:27:31] Okay, bye.