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A Note About Randomness

How Making the Irrational Decision Sometimes Pays Off (Big)

Nicholas Frederick Brady was Secretary of the Treasury in the 1990s during the infamous Salomon Brothers scandal in which Warren Buffett, a major shareholder in Salomon, took over as CEO. Brady liked Buffett, not because he was famous and beloved, as he is today.

It just so happens, Brady's family were investors in the old northeastern textile mill known as Berkshire Hathaway. As Munger tells it, at business school in the early 1950s Brady analyzed Berkshire Hathaway and determined it was a "lousy business"---a correct assessment. He encouraged his family to exit the investment. His half did. The other half didn't. His uncle remained on the board and, in the 1960s, met the young fellow Warren Buffett. Buffett would soon gain control of the company. Brady's uncle liked Buffett so he decided to hang on a little longer. And the rest is history.

The side that held on to the stock, though it was a wholly irrational decision, became fabulously rich. The side who sold got to boast that their son was a United States Senator then Secretary of the Treasury. I suppose the consolation prize was prestige.

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