56 THE WARREN BUFFETT WAY
For the next two years, while business at the paper was improving,
the mood on Wall Street was turning gloomy. In early 1973, the Dow
Jones Industrial Average began to slide. The Washington Postshare price
was slipping as well; by May, it was down 14 points to $23. That same
month, IBM stock declined over 69 points, gold broke through $100 an
ounce, the Federal Reserve boosted the discount rate to 6 percent, and
the Dow fell 18 points—its biggest loss in three years. And all the while,
Warren Buffett was quietly buying shares in the Washington Post(see
Figure 4.3). By June, he had purchased 467,150 shares at an average
price of $22.75, worth $10,628,000.
Katherine Graham was initially unnerved at the idea of a nonfamily
member owning so much Post stock, even though the stock was non-
controlling. Buffett assured her that Berkshire’s purchase was for invest-
ment purposes only. To further reassure her, he offered to give her son
Don, slated to take over the company someday, a proxy to vote Berk-
shire’s shares. That clinched it. Katherine Graham responded by invit-
ing Buffett to join the board of directors in 1974 and soon made him
chairman of the f inance committee.
Katherine Graham died in July 2001, after a fall in which she sus-
tained severe head injuries. Warren Buffett was one of the ushers at her
funeral services at Washington’s National Cathedral.
Figure 4.3 The Washington Post Company price per share, 1972–1975.