It’s July 23, 2000. The Bubble has burst, though bottoms haven’t been reached. The World Trade Center still stands tall. Enron is one of the world’s most respected companies. The New York Times declares Hank Greenberg a better investor than Warren Buffett.
As the article points out, over the previous 5 and 10 year periods, AIG had substantially outperformed Berkshire. The article goes on at great length to paint Greenberg and Buffett as “Polar Opposites”, Buffett, “invests like a riverboat gambler,” while Greenberg “may act like the tough guy, but when it comes to investing A.I.G.’s capital, he turns cautious.”
ONE plays the part of the hayseed, the other the quintessential New York tough guy, complete with flinty stare and a vocabulary that might stun the crowd at a hip-hop concert. One loves bridge and jokes that he reluctantly drags himself around a golf course; the other is a bundle of energy whose idea of relaxation is rocketing down a frozen ski trail.
The events of the subsequent decade make the article seem laughable. Greenberg was forced out of AIG by NY Attorney General Spitzer, and AIG required nearly $200 Billion in government capital to avert the most spectacular corporate collapse in American history. Were AIG’s flaws already present? Could a careful investor have detected red flags back then?
One more hypothetical nags at us: what would the world look like today had Greenberg managed to hold onto his job as AIG CEO and if Buffett had lost his in the midst of a 1970s SEC investigation. It would be a different world indeed.