Sandy Gottesman (1926-2022) was the founder of First Manhattan Co., a prominent investment firm. With over five decades of experience in finance, Gottesman has established himself as a respected expert in wealth management and investment strategy.
The Buffett connection
Gottesman founded First Manhattan Co. in 1964, an investment advisory firm built on old-fashioned value investing for wealthy families. But his most consequential financial decision had nothing to do with his firm. He met Warren Buffett in 1962, became one of the earliest investors in Berkshire Hathaway, and rode that investment for six decades, eventually joining Berkshire’s board of directors in 2003. It is one of the great examples of a simple strategy executed with extraordinary patience: find the right person early, invest, and then do nothing for sixty years. The friendship ran deeper than money. Gottesman was part of the small circle of investors, Buffett and Charlie Munger included, who met regularly to talk about markets and life, including the early gatherings of the so-called Graham Group. When he died, Buffett called him one of the toughest and nicest friends he ever had. The lesson is not that you can replicate buying Berkshire in the 1960s. It is that Gottesman’s wealth came from the same behavior his firm preached to clients: pick carefully, hold long, and let compounding do the work.
Lessons from Sandy Gottesman’s Career
1. Long-Term Investing
Gottesman emphasizes the importance of long-term investing, encouraging individuals to adopt a patient approach. This strategy allows investors to ride out market fluctuations, potentially leading to substantial returns.
2. Diversification
Gottesman stresses diversification as a crucial aspect of portfolio management. By spreading investments across various asset classes, individuals can mitigate risk and increase opportunities for growth.
3. Active Management
First Manhattan Co.’s success can be attributed to Gottesman’s active management approach. This involves continuously monitoring market trends and adjusting investment strategies accordingly.
Philanthropic Efforts
Gottesman’s commitment to philanthropy is noteworthy. He has supported various causes, including education and healthcare initiatives. His dedication serves as a reminder of the significance of giving back to the community.
Key Takeaways for Personal Finance
- Develop a long-term perspective: Resist the temptation of quick gains and focus on sustained growth.
- Diversify your portfolio: Spread investments across asset classes to minimize risk.
- Stay informed and adaptable: Continuously educate yourself on market trends and adjust your strategy accordingly.
- Prioritize giving back: Allocate a portion of your wealth to support meaningful causes.
Sandy Gottesman’s remarkable career offers valuable insights for individuals seeking to manage their finances effectively. By embracing long-term investing, diversification, and active management, you can navigate the complex world of personal finance with confidence. Remember, financial success is not solely about accumulation; it’s also about making a positive impact.
The billion-dollar gift
Gottesman’s fortune produced one of the largest charitable gifts in American history, though he did not live to see it announced. In February 2024, his widow Ruth Gottesman, a former professor at the Albert Einstein College of Medicine, donated $1 billion to the school to cover tuition for all its students in perpetuity, the largest gift ever made to a medical school in the United States. The money came from the Berkshire Hathaway fortune her husband had built. The gift landed exactly where it would matter most. Einstein’s students graduate with crushing debt, often over $200,000, and the school sits in the Bronx, one of the poorest congressional districts in the country. Free tuition means its graduates can choose lower-paying specialties like pediatrics and primary care without the debt forcing them into lucrative fields. It is a fitting coda to a value investor’s life: capital allocated patiently for decades, then deployed all at once where the return, measured in doctors rather than dollars, is enormous.
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