Case Study: The Fall of Rick Guerin


Over the past few decades, Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) have collectively issued tens of thousands of pages of advice on investing and how to live a better life. Their interviews and shareholder meetings have been transcribed and distributed worldwide, allowing investors from all walks of life to benefit from their knowledge.

These two billionaires are not the only successful investors globally, but they stand out for their longevity. Buffett has been investing since he was a teenager. That means he has been active in the stock market for around seven decades. Munger started investing in stocks later than his partner, but he was an active real estate investor before he opened his first investment partnership. Thanks to their lengthy investment careers, these two investors stand out from the crowd. Thus, by studying why they have consistently succeeded decade after decade, we can try and improve our own investment process.

However, not all investors are able to stay in the spotlight decade after decade. In an interview with the Motley Fool in 2012, Mohnish Pabrai (Trades, Portfolio) was asked about his lunch with Buffett, for which he paid $650,000 in 2007. Pabrai recalled that during the meal, he had asked Buffett about Rick Guerin, who was one of the so-called "Superinvestors of Graham and Doddsville" that the Oracle of Omaha had outlined in his now-famous essay published in the fall of 1984.

The fall of Rick Guerin

Pabrai noted that Guerin worked with Munger and Buffett on several notable deals, including See's Candies and Blue Chip Stamps. However, Guerin faded into the background in the late 1980s. Pabrai wanted to know why. This is how he later described the discussion between himself and Buffett on this topic: