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“Today, with much of finance, media, government and tech located in coastal areas, it’s easy to overlook the many miracles occurring in middle America,” Buffett wrote in the widely-read letter.
The 90-year-old Omaha, Nebraska native, who has an estimated net worth of $92.7 billion, is widely considered the greatest investor of all time.
Buffett, who has long been bullish on America, wrote that “success stories abound throughout America.”
“Since our country’s birth, individuals with an idea, ambition and often just a pittance of capital have succeeded beyond their dreams by creating something new or by improving the customer’s experience with something old,” he said.
In his letter, he highlighted two communities that “provide stunning illustrations of the talent and ambition existing throughout our country.”
To no surprise, he began with Omaha, sharing a story about a 1940 Omaha Central High School graduate named Jack Ringwalt. According to Buffett, Ringwalt started a property/casualty insurance company with $125,000 called National Indemnity. This “pipsqueak operation” competed with the “big boys” by focusing on “odd-ball risks.”
“Jack was honest, shrewd, likeable and a bit quirky," Buffett wrote. "In particular, he disliked regulators. When he periodically became annoyed with their supervision, he would feel an urge to sell his company."
In 1967, after a 15-minute conversation, Ringwalt sold National Indemnity to Berkshire Hathaway on a handshake deal.
“I never asked for an audit," he said. "Today National Indemnity is the only company in the world prepared to insure certain giant risks. And, yes, it remains based in Omaha, a few miles from Berkshire’s home office."
Buffett pointed out that Berkshire has purchased four additional Omaha-based businesses, most famously the Nebraska Furniture Mart, founded by the legendary Rose “Mrs. B” Blumkin, a Russian immigrant who arrived unable to speak or read in English.
The next city he pointed to was Knoxville, Tennessee, where Berkshire now owns 100% of Clayton Homes and 38% of Pilot Trade Centers, with plans to own 80% by 2023.
The respective founders — Jim Clayton of Clayton Homes and “Big Jim” Haslam of Pilot Travel Centers, graduated from the University of Tennessee and chose to build their businesses in Knoxville.
“Neither had a meaningful amount of capital nor wealthy parents. But, so what? Today, Clayton and Pilot each have annual pre-tax earnings of more than $1 billion. Together they employ about 47,000 men and women,” Buffett wrote.
Buffett emphasized that there’s an “army of successful entrepreneurs who populate every part of our country.” What’s more, entrepreneurs need America’s “framework for prosperity” and America needs people willing to build businesses.
“In its brief 232 years of existence, however, there has been no incubator for unleashing human potential like America," he wrote. "Despite some severe interruptions, our country’s economic progress has been breathtaking. Beyond that, we retain our constitutional aspiration of becoming ‘a more perfect union.’ Progress on that front has been slow, uneven and often discouraging. We have, however, moved forward and will continue to do so. Our unwavering conclusion: Never bet against America."
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