A Few Life Lessons from Buffett, Munger, and Jerry Seinfeld
"Humor is not just for the simple fun of laughing, but for the true perspective of the silliness of all humans ... It is the one thing at the end of your life you will not wish you did less of."
The Jewish New Year holiday of 1987 was an opportunity for Buffett to buy a chunk of the legendary investment bank, Salomon Brothers.
Activist investor Ronald Perelman was trying to take over the bank at the time, something Salomon CEO John Gutfreund wasn’t thrilled about. Looking for a white knight, he reached out to Warren Buffett. Gutfreund knew that Perelman – an Orthodox Jew – would be offline during the holiday, and invited Buffett to New York during the Jewish New Year weekend.
Buffett came alone, and agreed to inject $700M into Salomon Brothers. In exchange, Berkshire received preferred stock with an expected return of 15% and virtually no risk. The deal was concluded with a handshake. The lucrative terms provoked anger within Salomon, but the investment bank wasn’t just receiving Berkshire’s money. They were receiving Buffett’s reputation.
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“So, Warren, you really want to invest in this, huh?” the late Charlie Munger remarked sarcastically, as he and Buffett were observing the trading floor of Salomon Brothers. Dozens of traders huddled together in front of green computer screens, cursing and yelling while closing deals. Buffett didn’t respond; he was quietly staring, through the cigarette smoke that covered the room, at the mess he was about to purchase.
The messy trading room reflected the general disorder in which Salomon operated. It was not the kind of management Buffett and Munger used to admire. But Buffett felt he had no choice. John Gutfreund and Salomon helped save GEICO, per Buffett’s personal request, about a decade earlier. He owed them.
Trustworthiness was always important to Buffett, in order to maintain his reputation. This is why he was willing to “mortgage” his reputation in this deal.
At least take a board seat, Munger urged. A company dealing with complex financial transactions might run into troubles.
On one episode of Seinfeld, famously “a show about nothing”, Jerry is disappointed after his show got cancelled. Right after, he is amazed when offered another gig on the same date. “You know who you are?” Kramer tells him, “Even Steven!”
And so it goes – Jerry misses a train and a bus shows up, and later that night misses a TV show he wanted to watch, just to find a rerun. When Elaine hears about how everything evens out for him, she urges Jerry to give her a $20 bill. Which she immediately throws out the window. “Let’s see if it comes back,” she explains eagerly.
Jerry, stunned, angrily replies, “you know, you could have just thrown a pencil out the window!”
About to go to the coffee shop later, Jerry wears a jacket, and excitedly presents what he pulled out from his pocket – “Look! Elaine! A twenty!”
“They interviewed me for about 10 minutes and said: ‘Forget it. You’re not going to Harvard.’ My first thought was ‘What do I tell my dad? This is terrible.’ But, it turned out to be the best thing that ever happened to me.”
Warren Buffett was obsessed with money from an early age. It was obvious to him that he would go to Harvard. But at Harvard Business School, they viewed their mission as raising the leader of tomorrow. A whiz kid who only cared about stocks, wasn’t what they looked for. “I looked about 16 and emotionally was about nine,” Buffett described himself.
Looking for other options, Buffett recognized a familiar name as he was browsing the Columbia University brochure. Benjamin Graham, author of The Intelligent Investor – a book that heavily influenced Buffett – was teaching at Columbia Business School.
The school year was already about to start, but Buffett wrote a letter1:
Dear Professor, I thought you guys were dead, but now that I found out that you’re alive and teaching at Columbia, I would really like to come.
Buffett was admitted, and, naturally, received an A+ from Graham. Over seventy years after taking his class, Buffett still talks about Graham as his great mentor.
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Upon graduation, Buffett wanted to keep learning from Graham. He asked for a job at his investment partnership. But Graham rejected him. He explained that he would have loved to hire the brightest student he ever had, but their policy would not allow it. The Graham-Newman partnership hired Jews only.
It was 1952, a few short years after the Holocaust; while the war was already over, antisemitism was prevalent in Wall Street (and throughout the country). Graham himself was born as Grossbaum. The Jewish family changed their name upon emigrating from England, in hope that it would make their new life in New York easier. The few openings that were available at Graham-Newman, were kept for Jewish professionals who were often excluded from many other firms.
Disappointed, Buffett returned to Omaha.
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In an interview for his HBO documentary, Buffett said that there were two turning points in his life. “Once when I came out of the womb and once when I met Susie. I was a lopsided person, she put me together”.
Buffett felt warmly about Susan Thompson ever since he first met her in college, before leaving to business school in New York. Her father – a dean at the University of Omaha – was running political campaigns for Howard Buffett, Warren’s dad. When he was introduced to Susie, the introvert Warren fell for the charming and socially-outgoing musician.
While Buffett was studying at Columbia, Susie was in a relationship with another man named Eugene Abrahams. Eugene was Jewish. Susie was Catholic. She was pressured to break up with him.
Romantic relationships with Jews were frowned upon in the 1950s – have I mentioned the antisemitism back then? – and Susie’s father, a public political figure in Omaha, forbade her to go out with a Jewish guy.
It was around the time when Buffett completed his MBA and returned to Omaha. Susie was now single, and Buffett pursued her hand in marriage. She ultimately said yes.
Not being Jewish, Buffett was rejected by Graham-Newman2; thanks to that same fact – he won Susie. Even Steven.
A few years back, I attended the annual meeting of the Daily Journal Corporation. A person stood up to ask a question, and began by complimenting Charlie Munger’s sense of humor. He asked if Munger ever considered being a comedian. Munger laughed, and said that he considered himself a “Gentile Jew”.
“If you look at the way the world is working,” he explained, “just about 2% of the people provide about 60% of the humor.”
“This is weird because this is a group that’s had a lot of trouble. And so I just like the Jews, I like the humor. My way of coping. And by the way, I recommend it to all of you.”
He then went on to tell a joke.
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In a 2023 interview, Charlie revealed that other than scavenging through a pile of books, he was also binge-watching Seinfeld. It was his third time going through all the episodes. Becky Quick, the interviewer, tried to understand why.
“I do like a bunch of self-centered people making the wrong decisions,” Munger said. He went on to argue it wasn’t really a show about nothing. “It’s about the humor of life being used to make life endurable.”
“Nick,” Buffett started his call with Treasury Secretary Nick Brady during the summer of 1991, “this is the most important day of my life.” Buffett called to tell him of his decision to step in as CEO of Salomon Brothers. He asked for the blessing and support of the administration.
Earlier, news broke that a trader named Paul Mozer had violated the rules around Treasury bond auctions, making millions of dollars for Salomon. What’s worse – Gutfreund, Salomon CEO, found out about it, and he promised to take care of it.
But Gutfreund failed to report this to the regulators. He failed to do anything. Gutfreund was “sucking on his thumb”, as Munger described it after the fact. Meanwhile, Mozer – who kept his job – repeated the same illegal scheme in additional bond auctions.
When the details got out, Gutfreund had to leave as CEO. But that wasn’t enough for the Federal Reserve, which intended to cut off ties with the rogue bank. At Salomon, they could already see the headlines, “Treasury to Salomon: Drop Dead.”
Buffett was determined to fix whatever needed fixing, earn the trust of the Treasury and the Fed, and save Salomon.
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It’s not that Buffett was excited about volunteering for the CEO role. “If they asked me to perform an open-heart surgery, I’d be just as qualified,” he laughed in hindsight.
It’s not like Buffett had to insert himself into the Salomon mess, either. On the line was a $700M investment of Berkshire’s money; it wasn’t a small amount, but also not a huge deal for America’s second richest at the time, valued at almost four billion dollars. Even if Salomon went to zero, Buffett would have only lost about 10% of his net worth.
But there was another asset on the line, one that was far more important for Buffett: his reputation. He believed that the reputation he built for Berkshire and himself was the key to the hundreds of billions of dollars he hadn’t earned yet. “It takes a lifetime to build a reputation”, Buffett often says, “and five minutes to ruin it.”
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“Lose money for the firm and I will be understanding,” Buffett told Salomon employees when he stepped in as CEO. “Lose a shred of reputation for the firm, and I will be ruthless.”
Beyond the official compliance rules, it was critical to build a new ethos at Salomon. The same investment bank that inspired “Liar’s Poker”. Buffett had to uproot the culture that Michael Lewis described in that book.
In conversations with Treasury and Federal Reserve officials, Buffett reiterated his promises for a deep and thorough cleaning, and immediately reporting – and fixing – every violation found. In exchange, he asked not to suspend Salomon; Buffett needed the bank to stay alive as he worked through the problems.
Last year, Jerry Seinfeld delivered a commencement speech at Duke University. He told the audience that they were all going to do fantastically well, and urged them to keep their sense of humor along the way. That was his key message.
“[Humor] is not an accessory,” Seinfeld explained. “It’s your Stanley Cup water bottle on the brutal long hike of life. Humor is not just for the stress relief or even just the simple fun of laughing, but for the true perspective of the silliness of all humans and all existence.”
That is why, Seinfeld told the graduating students, it’s important not to lose their humor. “Even if it’s at the cost of occasional hard feelings, it’s okay. You got to laugh. That is the one thing at the end of your life you will not wish you did less of. Humor is the most powerful, most survival-essential quality you will ever have or need to navigate through the human experience.”
“Thank you,” Seinfeld paused and responded to the cheers from the crowd, “I was hoping you’d like that part.”
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I think Charlie Munger would have agreed. Back at that Daily Journal meeting, after describing himself as a Gentile Jew, Munger said that “It does help to go through life with a little humor.” He explained that “One thing that’s nice about the human condition is that people are always doing these utterly ridiculous things. You don’t lack for new things to crack jokes about.”
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That 2023 interview where Charlie talked about Seinfeld, was supposed to play in his 100th birthday celebration. But the event never took place. Charlie Munger passed away a couple of weeks before becoming a centenarian. At the hospital, in response to a nurse asking how he was doing, he said “I’m dying. How are you?”
The 2022 annual meeting of Berkshire Hathaway was held in front of a live audience, for the first time since COVID. That may have put Warren Buffett in a cheerful mood. “Charlie and I are now, combined, … 190 years old,” were his opening words to Berkshire shareholders. Then he added, as the crowd started laughing, “It really shouldn’t be too much to ask. I mean if we had a manager somewhere that was 98, I might want to send somebody by, occasionally, to see whether he was cutting paper dolls or something.”
After the audience stopped laughing, Buffett told them that a few years back, two managers of companies acquired by Berkshire were suffering from dementia. “I mean, just a couple of known ones, actually,” he chuckled. Charlie really liked one of them, and it took them a long time to find out he was suffering from dementia. And the business he was running kept doing fine.
“So that’s become our test really, for new businesses.” Buffett kept the joke going. “We try to find something that a guy with Alzheimer’s can run. You don’t have as much competition for businesses like that. The guy sitting there cutting out paper dolls and, you know, that’s our man!” The audience was roaring with laughter.
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“Well, I’ll tell you a story I haven’t told before,” Buffett announced a few hours later, in response to one of the questions. It was May of 2022, thirty years after he had completed his short run as CEO of Salomon Brothers.
Appearing in front of Congress – merely ten days after taking on the CEO role – Buffett testified that by his judgment, the accounting seemed legit. He had not seen “anything yet that strikes me as terrible in accounting.”
And that was the truth at the point in time when he gave his testimony.
But, about a month later, the CFO told him “Warren, there’s probably something you should know.” He told him that 12 years earlier, Salomon had merged with another firm. Salomon’s accounting firm, Arthur Andersen – the largest auditing company in the US[went bankrupt] – couldn’t figure out how to put the books together. So they developed a mechanism – a “floating plug”, they called it – its value would be updated every day, to make the assets and the liabilities equal. “Today it’s $173,412,000, you know, and down to the penny. And tomorrow it’ll be something different.”
“I am sure glad I testified before Congress a month ago,” Warren thought to himself when he heard that. Because if they asked again, he would have to tell them about “this number that floats around every day, and we haven’t found it in 12 years, and Arthur Andersen doesn’t know where it is.” Imagine that.
“Strange things happen in this world,” he concluded.
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Jerry Seinfeld said at the end of his speech at Duke, “try to enjoy some of the dumbness of it all. That’s the best life advice I can give you.”
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It took Buffett nine months to clean up the mess at Salomon. He reached a settlement with the DOJ and the SEC, who agreed to a $100M fine. It is estimated that the illegal trades – which earned Salomon $4 million – ended up costing them $800 million in fines, loss of revenue, and legal expenses.
Buffett left the Salomon CEO post in May 1992. The financial cost was heavy. The mental toll might have been even heavier. But the gain was, his reputation. In the eyes of the government, the business community, the general public – he was the hero who fixed the corrupt bank.
When Jerry Seinfeld was interviewed by Harvard Business Review, they mentioned how Larry David and him had written Seinfeld all by themselves. Without the traditional writers’ room, which typically share some of the load. One of the reasons they ended the show was burnout. The interviewer asked if someone like McKinsey could have helped in finding a better model, allowing them to create more seasons.
“Who’s McKinsey?” Seinfeld asked in response. They answered that it was a consulting firm, and he asked if they were funny. “No,” the interviewer responded. “Then I don’t need them,” Jerry replied.
“If you’re efficient, you’re doing it the wrong way. The right way is the hard way. The show was successful because I micromanaged it—every word, every line, every take, every edit, every casting. That’s my way of life.”
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“Warren Buffett told me that a long time ago you told him how he should live his life,” Becky Quick told Charlie Munger at the end of what turned out to be the last interview of his life. “That he should write his obituary the way he wants it written and then live his life accordingly.”
Then she asked if Charlie had done the same. “I’ve written my obituary the way I live my life, and if people want to pay attention to it, it’s all right with me. And if they want to ignore it, that’s okay with me too. I’ll be dead, what difference will it make,” he laughed.
Then he added, “I think it’s not a bad idea.”
When Becky asked if he would write the same obituary in his 30s as he would that day – on the verge of age 100 – he said “sure”.
“I basically believe in the soldier-on system,” Charlie explained. “Lots of hardship will come and you have to handle it well by soldiering through. A few rare opportunities will come – you have to learn how to recognize them when they come and not to make too minor a trip to the pie counter when the opportunity is available.”
“Those are simple lessons,” he concluded.
The letter was sent to Professor David Dodd, who jointly authored Security Analysis with Benjamin Graham.
Warren Buffett eventually joined Graham-Newman as an analyst a couple of years later.
Another post, filled with such deep treasure. Thanks Matan.