In a letter to his son and daughter-in-law advising them to always have some ready cash, he described the Buffetts as bourgeois incarnate: "I might mention that there has never been a Buffett who ever left a very large estate, but there has never been one that did not leave something. They never spent all they made, but always saved part of what they made, and it has all worked out pretty well."16 "Spend less than you make" could, in fact, have been the Buffett family motto, if accompanied by its corollary, "Don't go into debt."

Henrietta, also of French Huguenot extraction, was as thrifty, iron-willed, and teetotaling as her husband. A devout Campbellite,*4 she too felt the call to preach. While Ernest was at the store, she would harness the horses to the family's fringed surrey and gather her children to drive out into the countryside, where she knocked on farmhouse doors to hand out tracts. Her temperament did nothing to lighten the Buffett family tendencies. In fact, by some accounts, Henrietta was the preachingest of all the preaching Buffetts who had ever lived.

The Buffetts were tradespeople, not members of the merchant or professional class, but as pioneer settlers of Omaha, they were exceedingly conscious of their place. Henrietta's hope was that her four sons and daughter would become the first in the family to graduate from college. To pay for their schooling, she pared her household budget-more than was strictly necessary, it is said, even by Buffett standards. All the boys toiled at the family store when they were young. Then Clarence began a career in the oil business, with a graduate degree in geology.17 George, her second, got a PhD in chemistry and wound up on the East Coast. Her three youngest, Howard, Fred, and Alice, all graduated from the University of Nebraska. Fred took up duties at the family store, and Alice became a home-economics teacher.

Howard, the third son and Warren's father, was born in 1903. He had unhappy memories of feeling like an outsider during his years at Central High School in the early 1920s. Omaha was run by a handful of families who owned the stockyards, banks, department stores, and had inherited fortunes from the breweries now closed under Prohibition. "My clothes were pretty much hand-me-downs from my two older brothers," he said, "and I was a paperboy and the son of a grocery man. So the high school fraternities didn't look my way, and I was just one of the boys from what approximated outside of the tracks." He felt these snubs keenly; they marked him with a deep revulsion toward rank and privilege acquired by birth.18 At the University of Nebraska, Howard majored in journalism and worked at the college newspaper, the Daily Nebraskan, where he was able to combine the outsider's love of reporting on the activities of the powerful with the family fascination with politics. It would not be long before he met Leila Stahl, a girl whose background mingled the same interest in newspapers with self-consciousness about social class.

Leila's father, John Stahl, a sweet little dumpling of a man of good German-American descent, had traveled Cuming County, Nebraska, in a horse and buggy with a buffalo robe on his lap as superintendent of schools.19 The family history says he adored his wife, Stella, who gave him three daughters-Edith, Leila, and Bernice-and one son, Marion. Of English descent, Stella was unhappy living in West Point, Nebraska, a town of German-American hausfraus, where she never felt at ease. It is said that she consoled herself by playing the pipe organ. In 1909, Stella suffered a mental breakdown. This must have seemed an ominous recurrence of family history, for her mother, Susan Barber, who was described as "maniacal," had been an inmate of the Nebraska State Insane Asylum, where she died in 1899. After an incident in which, according to family lore, Stella went after Edie with the fireplace poker, John Stahl gave up his traveling job to care for their children. Increasingly, Stella retreated to her darkened room, where she sat twisting her hair, apparently depressed. This isolation was punctuated by occasional episodes of cruel behavior toward her husband and the girls.20 Stahl, realizing that he could not leave the children alone with their mother, bought a newspaper, the Cuming County Democrat, so he could make a living working from home. From the time Leila was five, she and her sisters essentially ran the household and helped their father put out the paper. She learned to spell by setting type. "When I was in the fourth grade," she recounted, "we had to come home from school and set type before we could go out and play." By age eleven she could run a jackhammer of a Linotype press, and every Friday she missed school because of the headaches she suffered after having to get out the paper on Thursday night. Living above the business in a house infested by mice, the family pinned all their hopes for the future on Marion, the brilliant brother who was studying to be a lawyer.

During World War I the Stahls' difficulties grew. When the Cuming County Democrat came out against Germany in a German-American town, half their subscribers dropped the paper and switched to the West Point Republican- a financial catastrophe. John Stahl himself was an ardent supporter of the Democratic political giant William Jennings Bryan. At the turn of the century, Bryan had been one of the most important politicians of his era, nearly becoming President of the United States. In his heyday, he stood for a kind of "populism" that he set forth in his most famous speech: "There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it."21 The Stahls viewed themselves as part of the masses, the class that the rest rested upon. Their ability to bear that load was not increasing. By 1918, Leila's sixteen-year-old sister Bernice-considered the dullard of the sisters, with a tested IQ of 139-had apparently begun to give up on life. She was convinced she would end up mentally ill like her grandmother and mother, and die like her grandmother in the Nebraska State Insane Asylum.22 During this time, Leila's educational schedule suggests a chaotic home life. She delayed going to college for two years to help her father. After a single semester at the University of Nebraska in Lincoln, she returned home for another year to help out again.23 Energetic and considered the brightest of the girls, Leila later portrayed this episode in a different light, describing her family as perfect and saying that she stayed out of college three years to earn her tuition.

When she arrived at Lincoln in 1923, she had one clear and acknowledged ambition, which was to find a husband. She headed straight to the college newspaper and asked for a job.24 A small-boned girl with a soft brown bob who bustled like the robin of spring, Leila wore a charming smile that softened the expression in her arrowhead-sharp eyes. Howard Buffett, who had started at the Daily Nebraskan as a sportswriter before rising to editor, hired her straightaway.

Good-looking in a dark-haired, professorish way, Howard was one of only thirteen in the entire student body who had been "tackled" for the Innocents, a society of outstanding men on campus modeled after the honorary societies of Harvard and Yale. Named for the thirteen Popes Innocent of Rome, the Innocents declared themselves champions against evil. They also sponsored the prom and Homecoming.25 Presented with such a big man on campus, Leila grabbed him instantly.

"Well, I don't know whether she worked very much on the Daily Nebraskan," Howard said later, "but she sure worked on me. I've never regretted it-don't make any mistake about it-it's the best deal I ever made."26 But Leila was a good student with a head for mathematics, so when she announced plans to drop out of college and marry, her calculus professor reportedly slammed down the textbook in dismay.27 Howard, who was about to graduate, went to his father to discuss his choice of career. He had no real interest in money but, at Ernest's insistence, gave up the high-minded, low-paying business of journalism and the possibility of law school in favor of selling insurance.28 The newlyweds moved into a tiny white four-room bungalow in Omaha, which Ernest filled with groceries as their wedding gift. Leila furnished it top to bottom for $366-items bought, she noted, at "sort of wholesale prices."29 From that day forward she channeled her energy, ambition, and talent for math-which by all accounts exceeded her husband's-into boosting Howard's career.30 In early 1928, the Buffetts' first child, Doris Eleanor, was born.31 Later that year, Leila's sister Bernice suffered a mental breakdown and quit her teaching job. But Leila seemed free of the moody listlessness that oppressed her mother and sister. A whirlwind of energy, she could talk nonstop for hours (although she litanied the same stories). Howard called her the "Cyclone."

As the Buffetts settled into the life of a young married couple, Leila got Howard to join her own First Christian Church, and noted proudly in her "day book" when he was made a deacon.32 Still avidly interested in politics, Howard began to show signs of the family urge to preach. But when he and Ernest turned the dinner table into a forum for endless discussions of the subject, Howard's brother Fred was so bored that he would lie down on the floor and go to sleep.

Leila had converted to her new husband's politics, however, and was now an enthusiastic Republican. The Buffetts applauded Calvin Coolidge, the man who proclaimed "The chief business of the American people is business,"33 and shared his belief in small government with minimal regulation. Coolidge had lowered taxes and granted citizenship to American Indians, but mostly he shut up and stayed out of the way. In 1928, his Vice President, Herbert Hoover, was elected as his successor, vowing to continue pro-business policies. The stock market had prospered under Coolidge, and the Buffetts felt Hoover was the man to keep it going.

"When I was a kid," Warren would later say, "I got all kinds of good things. I had the advantage of a home where people talked about interesting things, and I had intelligent parents and I went to decent schools. I don't think I could have been raised with a better pair of parents. That was enormously important. I didn't get money from my parents, and I really didn't want it. But I was born at the right time and place. I won the 'Ovarian Lottery.'"

Buffett always credited most of his success to luck. When it came to his recollections of his family, however, he was creating some of his own reality. Few would agree he couldn't have been raised with a better set of parents. When he talked about how important it is for parents to have an Inner Scorecard when raising their kids, he always used his father's Inner Scorecard as an example. He never mentioned his mother.

6.

The Bathtub Steeplechase Omaha * 1930s In the 1920s, the champagne bubbles of a frothy stock market led ordinary people to invest for the first time.1 By 1927, Howard Buffett decided to join them and got a job as a stockbroker with the Union State Bank.

The celebration ended two years later. On "Black Tuesday," October 29, 1929, the market dropped $14 billion in a single day.2 Wealth worth four times the budget of the United States government evaporated in a few hours.3 The market's losses in 1929 cost $30 billion, close to what the country had spent fighting World War I.4 Amid the bankruptcies and suicides that followed, people began to hoard money, and nobody wanted stocks.

"It was four months before my dad made his next sale. His first commission was five bucks. My mother used to go out with him at night on the streetcar, waiting outside when he would call on somebody, just so he wouldn't feel so depressed when he came home."

Ten months after the crash, on August 30, 1930, the Buffetts' second child, Warren Edward, was born, five weeks before his due date.

An anxious Howard went to see his father, hoping to be hired on at the family grocery store. All the Buffetts, even those with other jobs, put in a stint at the store every week, but only his brother Fred worked there full-time, and that for meager pay. Now, Ernest told Howard that he had no money to pay another son.5 In one sense, Howard felt relief. He'd "escaped" from working at the store and never wanted to go back.6 But he worried that his family would starve. "Don't worry about food, Howard," Ernest told him. "I'll just let your bill run."

"That was my grandfather," Warren says. "'I'll just let the bill run.'" It wasn't that Ernest didn't love his family, "you just wished he showed it a little more often."

"I guess you'd better go back on home to West Point," Howard told his wife. "At least you'll have three meals a day." But Leila stayed. She walked to Robert's Dairy to pay the bill rather than pay a streetcar fare. She started skipping her church circle because she couldn't afford the twenty-nine cents for her turn at bringing coffee.7 Rather than run up a tab at the family store, she sometimes went without to make sure Howard was fed.8 One Saturday, two weeks before Warren's first birthday, people stood on line downtown, dripping with sweat in the hundred-degree heat, waiting to reclaim their cash from the shaky custody of the local banks. They shuffled forward from early morning until ten p.m. and counted and recounted the people ahead in line, silently repeating a financial rosary: Please, God, let there be money left when it's my turn.9 Not every prayer was heard. Four state banks closed their doors that month, leaving their depositors unpaid. One of them was Howard Buffett's employer, the Union State Bank.10 Warren repeats the family legend: "On August 15, 1931, he went down to the bank. It was two days after his birthday, and the bank was closed. He had no job, and his money was in the bank. He had two little kids to feed.11 He didn't know what to do. There was not another job to find."

But within two weeks Howard and two partners, Carl Falk and George Sklenicka, filed the papers to start a stockbrokerage firm, Buffett, Sklenicka & Co.12 It was a maverick decision-to open a stockbroking business at a time when no one wanted to buy stocks.

Three weeks later, England went off the "gold standard."*5 This meant that, to avoid bankruptcy, the country-which was deep in debt-would simply print more money to pay off its loans. This is a neat trick that only a government can pull off. It was as if the country with the most widely trusted and accepted currency of the age announced: "We are going to write bad checks, and you can take them or else." The announcement instantly exploded trust in formerly gilt-edged institutions. All over the world, financial markets plunged.

The already sputtering United States economy coughed, then stalled, then plummeted into free fall. A rush of banks was sucked into its trailing vacuum and collapsed. In city after city, depositors fought their way to the teller's window and were turned away.13 But in the middle of this maelstrom, Howard's business was succeeding. His clients at first were mostly family friends. He sold them safe securities like utility stocks and municipal bonds. In the firm's first month of operation, as financial panic spread around the world, he produced $400 of commissions and the firm was profitable.14 Through the ensuing months, even as people's savings evaporated and faith in banks disappeared, Howard stuck to the same kind of conservative investments that had gotten him started, steadily adding customers and growing his business.15 The family's fortunes had turned around. Then, shortly before Warren's second birthday, twenty-month-old Charles Lindbergh Jr. was kidnapped and murdered in March 1932. The snatching of the "Lone Eagle's" baby was "the biggest story since the Resurrection," according to pundit H. L. Mencken. The country flew into a kidnapping paranoia in which parents conveyed their terror of abduction to their children, the Buffetts being no exception.16 Around then, Howard suffered some kind of attack serious enough for Leila to call an ambulance. The Mayo Clinic eventually diagnosed him with a heart condition.17 From that time on, he lived with restrictions: He wasn't supposed to lift things, run, swim. Leila, whose life now revolved entirely around Howard, the Prince Charming who had rescued her from the miserable fate of running a Linotype press, must have been terrified at the thought of anything happening to him.

Warren was already a cautious child, who had kept his knees bent and stayed close to the ground when he learned to walk. Now, when his mother took him to her church circle meetings, he was content to sit placidly at her feet. She diverted him with an improvised toy-a toothbrush. Warren gazed quietly at the toothbrush for two hours at a stretch.18 What could he have been thinking as he stared at its columns and rows of bristles?

That November, with the country in crisis, Franklin Delano Roosevelt was elected President. Howard was certain this man of privilege who knew nothing of the common people would pollute the country's currency and drive it to ruination.19 He stuck a big sack of sugar in the attic to prepare for the worst. By this time, Howard looked like a boyish Clark Kent in a business suit, nearsighted behind his wire-rimmed glasses, with receding dark hair, an earnest smile, and a genial manner. But he turned thunderous when it came to politics, reviewing the news of the day at top volume over dinner. Doris and Warren probably had no idea what Howard meant as he ranted about the horrors that would befall the country now that a Democrat occupied the White House. But terms like "socialism" started to embed themselves in the children's minds. After dinner, they watched their awe-inspiring father retire to his red leather armchair in the living room next to the radio and disappear for hours behind his nightly newspaper and magazines.

Politics, money, and philosophy were acceptable topics for dinner-table discussion at the Buffett house, but feelings were not.20 Even in an era of undemonstrative parents, Howard and Leila were notable for their lack of warmth. Nobody in the Buffett household said "I love you," and nobody tucked the children into bed with a kiss.

But to everyone outside the family, Leila appeared the perfect mother and wife. People called her peppy, upbeat, motherly, sweet, even "a gusher."21 In repeating her history, as she was fond of doing, she painted out the awkward bits, describing herself as a fortunate person brought up by wonderful Christian parents. Her favorite stories told of her and Howard's sacrifices-the three years of school she had missed to earn her college money, the four months Howard had gone without making a sale when he first started his business, walking to the dairy to save streetcar fare. Leila referred often to bouts of "neuralgia" (sometimes mistaken for migraines), which she attributed to the childhood years spent alongside the pounding Linotype.22 Nevertheless, she acted as though she must do everything and drove herself hard-bridge teas and steak fries, birthdays and anniversaries, calling on neighbors and cooking for church suppers. She paid more visits, baked more cookies, and wrote more notes than anyone. When pregnant, she once cooked dinner by herself for the family while trying to quell her morning sickness by smelling a bar of soap.23 Above all her attitude was: anything for Howard. "She crucified herself," said her sister-in-law Katie Buffett.24 But Leila's attitude of duty and sacrifice had another, darker, side: blame and shame. After Howard left on the streetcar for work in the morning, Doris and Warren would be playing or getting dressed and suddenly Leila might explode at them. Something in the tone of her voice might give a clue that the fuse was lit, but most of the time there was no warning.

"It was always something that we did or said, and there would be this flash, and then it didn't subside. All your past sins would be brought up. It was just endless. And my mother attributed it sometimes to having neuralgia, but she never showed that outwardly."

When in a rage, Leila would verbally lash the children over and over again, always the same: their lives were easy compared to her sacrifices; that they were worthless, ungrateful, and selfish; and should feel ashamed. She would pick at every real and imagined flaw; she nearly always aimed the tirade at Doris, and carried on saying the same things for at least an hour, sometimes as long as two. She never stopped until both children "just folded," says Warren, weeping helplessly. "She was not content until she reduced you to tears," says Doris. Warren was forced to watch her explosions, unable to protect his sister and desperate to avoid being targeted himself. While it was apparent that her attacks were deliberate and she had some degree of control over them, it isn't at all clear how she perceived her behavior as a parent. But no matter what she thought she was doing, by the time Warren was three years old and their sister Roberta, known as Bertie, was born, "it couldn't be put back together," he says, for him or for Doris. The damage to their souls was done.

The children never asked for help from their father, even though they knew that he was aware of Leila's eruptions. Howard might say to them, "Mom's on the warpath," a tipoff that a rage was coming, but he didn't intervene. Usually, however, Leila's explosions took place out of Howard's earshot, and they were never aimed at him. In a sense, therefore, he was the children's protector. Even though he did not save them, Howard still meant security, because when he was around, they were safe.

Outside the tidy white bungalow on Barker Avenue, Nebraska was sliding into lawlessness. Bootlegging flourished in Omaha until Warren was three years old.25 Out in the countryside, farmers faced with foreclosure on mortgages backed by nearly worthless farmland rose up in civil disobedience.26 Five thousand farmers marched on the state capitol in Lincoln until panicked lawmakers hastily passed a mortgage moratorium bill.27 As the cold winds scoured the parched western sand hills in November of 1933, they kicked up vast swirls of topsoil in towering black clouds that swept eastward as far as New York City at a clipper speed of sixty miles per hour. The gale shattered plate-glass windows and blasted cars off the road in its wake. The New York Times compared it to the volcanic eruption of Krakatoa. The dust-storm years had begun.28 In the middle of the worst drought of the twentieth century, Midwesterners took refuge in their homes as grit sandblasted the paint and pitted the glass on their automobiles. Leila swept red dust off the porch every morning. On Warren's fourth birthday, a cloud of ruddy dust buried the Buffetts' front porch and the wind blew the paper plates and napkins off the party table.29 Along with the dust came years of extraordinary heat. In summertime 1934 the thermometer in Omaha hit 118 degrees. After searching for days, a Nebraska farmer found his cow down a crack in a remote stubble field, trapped when the parched earth split apart.30 Plainsmen told tall tales about someone who fainted dead away when hit in the face by a drop of water and had to be revived with three buckets of sand. People slept in their backyards, camped on the grounds of Central High School, and on the grassy lawn of Omaha's Joslyn Art Museum, so as not to roast in the ovens of their own homes. Warren tried in vain to sleep covered in bedsheets soaked with water, but nothing could cool the baked air that steamed up to his second-story room.

With the record drought and heat of 1934,31 millions of grasshoppers arrived to devour the parched corn and wheat down to stubble.32 Leila's father, John Stahl, suffered a stroke that year, and while visiting his grandfather in West Point, Warren could hear the background drone of the ravenous hoppers. At their worst, they consumed fence posts, the laundry on the clothesline, and finally one another, gumming up tractor engines and clouding the air, thick enough to obscure a car.33 In truth, the early 1930s brought many other things to fear than fear itself.34 The economy worsened. Imitators of the era's most notorious gangsters-Al Capone, John Dillinger, and Baby Face Nelson-roamed the Midwest, pillaging the already vulnerable banks.35 Parents worried about the dust-bowl drifters and gypsies who passed through town. Occasional "mad dog" rabies scares quarantined children at home. The public swimming pools closed in the dog days of summer out of fear of "infantile paralysis"-polio-and parents warned their children constantly that if their lips touched the public water fountain, it could put them in an iron lung.36 Yet Nebraskans were trained from birth to respond to calamity with teeth-gritted optimism. Those years of dust and drought simply formed the backdrop to Midwestern life. The children grew up accustomed to outlandish weather in a state plagued with tornadoes and winds strong enough to blow a train from its tracks.37 The three little Buffetts went to school, played with friends, and ran around with a dozen kids in hundred-degree weather at neighborhood potluck picnics, their fathers in suits and their mothers in dresses and stockings.

Many of their neighbors may have suffered, their standard of living in decline, but Howard, son of a grocery man, had elevated his family into the more comfortable half of the middle class. "We made steady progress even in those tough times," he was to recall, "in an extremely modest sort of way." He was being modest about the family's modesty. While fifty men stood in line for a $17-a-week job driving the orange Buffett & Son grocery trucks, Howard's persistence in knocking on doors had made his stockbroking business, now called Buffett & Co., a success.38 Omaha was briefly under martial law during violent streetcar strikes and rioting in 1935, but Howard bought a brand-new Buick. He became active in local Republican politics. At age seven Doris, who had always worshipped her father, contemplated his future biography and wrote in the front of one of her notebooks, Howard Buffett, A Statesman.39 A year later, still in the shadow of the Great Depression, Howard built the family a much larger two-story red-brick Tudor-revival house in Dundee, a suburb of Omaha.40 As the family prepared to move, Leila got word that her brother, Marion, now a successful lawyer in New York, had been stricken with incurable cancer at age thirty-seven. "My uncle Marion was the pride and joy of my mother's family," says Buffett, as well as their principal hope to carry on the family name, unsullied by insanity.41 His death that November, childless, devastated his family. The next piece of bad news arrived when Leila's father, John Stahl, suffered another stroke that year, this one debilitating. Her sister Bernice, who cared for him at home, seemed increasingly sunk in depression. Her other sister, Edie, a schoolteacher, the prettiest and most adventurous of the girls, had vowed to stay single until either her thirties or until Bernice wed, but Leila, sharp and aware, refused to be trapped by her family's woes. She was going to make it, no matter what; she was going to create a normal life with a normal family.42 She planned the move and bought new furniture. In a major step up in the world, Leila could afford to hire a part-time housekeeper, Ethel Crump.

Now a more experienced mother of a more prosperous family, Leila formed a much healthier relationship with her youngest child, Bertie, as the intervals between her rages lessened. Bertie knew her mother had a temper but says she always felt loved. Warren and Doris never did. And Leila's obvious affection for Bertie did not help their sense of worthlessness.43 In November 1936, Roosevelt was reelected to a second term. Howard's only consolation was that FDR would be out in another four years. While he read his conservative journals each night, the children listened to the radio, played games, or sang hymns as Leila accompanied them on the family's latest acquisition-a pipe organ like the one her own mother had played.

While the Buffetts' new house and occasional luxuries like the organ reflected their upward progress, Leila always bought her children thrifty, practical, forgettable gifts, clothing bought on sale that couldn't be returned, and necessities-nothing that answered a child's fantasies. Warren had a little single-oval HO-gauge train set and coveted a more elaborate version, the kind he saw at the Brandeis department store downtown, which had multiple engines twisting and turning past flashing lights and signals, rising over snow-covered hills and dropping into tunnels, racing past tiny villages and disappearing into pine forests. But the closest he came to owning it was buying the catalog that depicted it.

"If you were a little kid with one little oval track, looking at this thing, it was completely unbelievable. You'd gladly pay a dime for the model-train catalog and just sit there and fantasize."

An introverted child, Warren could lose himself for hours in a model-train catalog. Sometimes, however, as a preschooler, he "hid," as he put it, at his friend Jack Frost's house, developing a babyish "crush" on Jack's kindhearted mother, Hazel. As time passed, his habit grew of spending much time at neighbors' and relatives' houses.44 His favorite relative was his father's sister Alice, a tall woman who had remained unmarried, lived at home with her father, and taught home economics. Surrounding Warren with warmth, she showed interest in everything he did and was thoughtful about how to motivate him.

By the time Warren entered kindergarten,45 his hobbies and interests revolved around numbers. Around age six, he became fascinated by the precision of measuring time in seconds, and desperately wanted a stopwatch. Alice knew better than to offer such an important gift with no strings. "She was nuts about me," Buffett says, "but she still would attach a condition or two. I had to eat asparagus or something like that. That was what motivated me. But I got a stopwatch in the end."

Warren would pick up his stopwatch and summon his sisters to join him in the bathroom they shared to watch the new game he had invented.46 He filled the bathtub with water and picked up his marbles. Each had a name. He lined them up on the flat edge at the back of the tub. Then he clicked the stopwatch just as he swept the marbles into the water. They raced down the porcelain slope, clicking and rattling, jumping as they hit the waterline. The marbles chased each other toward the stopper. When the first one hit, Warren punched the stopwatch and declared the winner. His sisters watched him race the marbles over and over, trying to improve their times. The marbles never tired, the stopwatch never erred, and-unlike his audience-Warren never seemed bored by the repetition.

Warren thought about numbers all the time and everywhere, even in church. He liked the sermons, he was bored by the rest of the service; he passed the time by calculating the life span of hymn composers from their birth and death dates in the hymnals. In his mind, the religious should reap some reward for their faith. He assumed that hymn composers would live longer than average. Living longer than average seemed to him an important goal. But piety, he found, did nothing to improve longevity. Lacking any personal sense of grace, he began to feel skeptical about religion.

The bathtub steeplechase and the information he had collected about the hymn composers had taught him something else, however, something valuable. He was learning to calculate odds. Warren looked around him. There were opportunities to calculate odds everywhere. The key was to collect information, as much information as you could find.

7.

Armistice Day Omaha * 19361939 When Warren started first grade at Rosehill School in 1936,1 he took to it right away. For one thing, it liberated him from spending part of the day at home with his mother. School opened up a whole new world for him, and right away he made two friends, Bob Russell and Stu Erickson. He and Bob, whom he called "Russ," began walking to school together, and on some days, he went over to the Russells' house after school. On other days, Stu, whose family lived in a modest frame house, went to the Buffetts' new brick home in the Happy Hollow country club neighborhood. Warren had something to do almost every day after school until his father returned from work. He had always gotten along with other children; now they kept him safe.

He and Russ would sit on the Russells' porch for hours, watching the traffic on Military Avenue. Scribbling in notebooks, they filled column after column with the license-plate numbers of passing cars. Their families found this hobby strange but attributed it to the boys' love of numbers. They knew Warren liked to calculate the frequency of letters and numbers on license plates. And he and Russ never explained their real reason. The street in front of the Russells' house was the only route out of a cul-de-sac neighborhood where the Douglas County Bank was located. Warren had convinced Russ that if someday that bank were robbed, the cops could nab the robbers using license-plate numbers. And only he and Russ would own the evidence that the cops would need to solve the crime.

Warren liked anything that involved collecting, counting, and memorizing numbers. He was already a keen stamp and coin collector. He counted how often letters recurred in the newspaper and in the Bible. He loved to read and spent many hours with books he checked out of the Benson Library.

But it was the crime-fighting and the theatrical potential of the license plates-which his family and the Russells never knew about-that brought out other aspects of his temperament. He loved to play cop, and he liked almost anything that brought him attention, including dressing up and playing at different roles. When Warren was a preschooler, Howard had returned from business trips to New York City with costumes for him and Doris, and he became an Indian chief, a cowboy, or a policeman. Once he started school, he began coming up with dramatic ideas of his own.

Warren's favorite games, however, were competitive, even if he was only competing with himself. He progressed from the bathtub steeplechase to a yoyo, then to bolo, sending the bolo ball on its rubber string flying away from his wooden paddle a thousand times. On Saturday afternoons at the Benson Theater, in between movies-three films for a nickel, plus a serial-he stood on the stage with other kids, competing to see who could keep the ball going longest. In the end everyone else stepped down, exhausted, leaving him alone onstage, still smacking the ball.

He even played out his competitiveness in his special, teasing, warm relationship with Bertie. He called her "chubby" because it made her mad and tricked her into singing at the dinner table, which was against the family rules. He played games with her constantly but never let her win, even though she was three years younger. But he had a tender side too. Once when Bertie stuffed her treasured Dy-Dee doll in a wastebasket in a fit of anger at her mother, Warren rescued it and returned it to her in the sunroom. "I found this in the wastebasket," he said. "You wouldn't want this in the wastebasket, would you?"2 Even as a child, Bertie recognized that her brother knew how to be tactful.

Bertie, on the other hand, was the self-confident, adventurous one, which Doris and Warren thought might explain why Leila rarely tore into her. Bertie had her own theory, seeing herself as someone who was able to keep up appearances in the way that their mother valued.

What mattered most to Leila was the esteem of others; she had what Warren would later come to call an Outer Scorecard. She was always worrying about what the neighbors would think, nagging her daughters to create the right appearance. "I was so careful to do the right things. I didn't want it to happen to me," Bertie says of Leila's tirades.

Doris was the rebellious one. Early on, she displayed a refined sense of taste and a high threshold for excitement, which put her at odds with the Buffetts' sedate routines and cheeseparing ways. The exotic, the stylish, and the novel attracted her, while her mother sheathed herself in a cloak of humility and preferred a self-conscious austerity to any kind of display. Thus Doris's very being seemed an affront to her mother, and the two clashed constantly. Leila's occasional rages were no less fierce than before. Doris had become a pretty child. And "the prettier she got," says Buffett, "the worse it was."

Warren showed early signs of a knack with people, but was also the competitive, precocious child, intellectually aggressive yet physically retiring. When his parents got him boxing gloves at age eight, he took one lesson and never put them on again.3 He tried skating, but his ankles wobbled.4 He didn't join in the street games with the other boys, even though he loved sports and was well-coordinated. The only exception to his aversion to hand-to-hand combat was Ping-Pong. When the Buffetts got a Ping-Pong table, he slammed away at it night and day against anyone who would take him on-his parents' friends, kids from school-until he became a menace with the paddle. On the single occasion anyone remembers that called for fists, however, little Bertie went out and took care of things for him. He cried easily if anyone was mean to him; he worked hard to be liked and to get along well with others. Yet despite Warren's cheerful demeanor, something about him struck his friends as lonely.

The Buffetts took a photograph of the three children at Christmas in 1937. Bertie seems happy. Doris looks wretched. Warren, clutching his favorite possession, a nickel-plated money changer, a gift from his aunt Alice, looks far less happy than called for by the occasion.

Leila's determination that they appear to be the perfect Norman Rockwell family hardened when Warren was eight and new calamities befell the Stahls. Her mother, Stella, had deteriorated, and the family admitted her to the Norfolk State Hospital, formerly the Nebraska State Insane Asylum, where Leila's grandmother had died.5 Her sister Edie spent three months in the hospital and nearly died of peritonitis after suffering a ruptured appendix. Afterward, she made up her mind to go ahead and get married, and wed a man of questionable background who made her laugh. This did not improve Leila's dim view of her sister, who had always seemed to her more interested in adventure than duty.

Meanwhile, Howard had been elected to the school board, a new role that became a point of pride in the family.6 Amid this mixture of Buffett progress and Stahl backsliding, Warren spent most of his time away from home, out of his mother's way. He paid calls around the neighborhood, made friends with other people's parents, and listened to political talk at their houses.7 As he roamed, he began collecting bottle caps. He went to filling stations all over town, scooping bottle caps out of the wells beneath the ice chests where they had fallen after customers popped their sodas open. Down in the Buffetts' basement, the piles of bottle caps grew: Pepsi, root beer, Coca-Cola, ginger ale. He became obsessed with collecting bottle caps. All this free information was lying around untouched-and no one wanted it! He found it amazing. After dinner, he spread his collection of bottle caps on newspapers all over the living-room floor, sorting and counting, sorting and counting.8 The numbers told him which soft drinks were most popular. But he also enjoyed sorting and counting as a way of relaxing. When he wasn't working on his bottle caps, he liked sorting and counting his coin collection and his collection of stamps.

School for the most part bored him. In Miss Thickstun's fourth-grade class with Bob Russell and his other friend Stu Erickson, to pass the time, he played math games and counted in his head. He liked geography, however, and found spelling exciting, especially the "spell-downs," in which six students from the first grade competed with six from the second. Whoever won advanced and competed with the third graders, and so on. Theoretically, a first grader could win six times and eventually beat a sixth grader. "I wanted to pass Doris on the spell-downs, and Bertie wanted to pass me." Alas, all three Buffetts were very smart kids, and neither happened. "Still, there was nothing like that for capturing our attention."

Warren enjoyed spell-downs, but nothing motivated him like blackboard arithmetic. From the second grade on, students raced to the board, two at a time. First they competed at sums against the clock, then subtraction, finally multiplication and division, tallying their numbers down the board. Warren, Stu, and Russ were the brightest in the class. At first they scored about the same, but over time Warren pulled ahead a little. And then, with practice, a little more.9 Finally one day Miss Thickstun asked Warren and Stu to stay after school. Warren's heart pounded in his chest. "We wondered what the hell we had done," Stu says. Instead of a scolding, Miss Thickstun told Warren and Stu to move their books from the 4A section on one side of the room to the 4B section on the other.10 They were skipping half a grade. Bob Russell was left behind, even though Mr. Russell got upset and complained.

Warren stayed friends with both, but kept his relationships with them separate: As before, although each was a friend of his, they were never really friends with each other.

Warren's fondness for minutiae continued to develop. His parents and their friends-who called him "Warreny"-got a kick out of his party trick of naming state capitals. By fifth grade he had immersed himself in the 1939 World Almanac, which quickly became his favorite book. He memorized the population of every city. He got a contest going with Stu over who could name the most world cities with populations over a million.11 One evening, however, Warren was distracted from his Almanac and his bottle caps by a terrible pain in his belly. The doctor made a house call, then went home to bed. But he couldn't get the house call out of his mind, so he returned and sent Warren to the hospital. Later that night, Warren underwent surgery for a ruptured appendix.

The doctor had almost been too late. Warren lay gravely ill in the Catholic-run hospital for several weeks. But cared for by the nursing sisters, he soon found the hospital was a comforting haven. As he began to recover, other pleasures came his way. The World Almanac was brought for him to study. His teacher made all the girls in his class write him get-well letters.12 His aunt Edie, who understood her nephew well, brought him a toy fingerprinting kit. He knew exactly what to do with it. He coaxed each of the sisters into stopping by his room. He inked all of their fingers, got a set of prints, and filed this collection away carefully upon returning home. His family found this behavior entertaining. Who would want a set of nuns' fingerprints? But Warren theorized that one of the sisters might eventually commit a crime. And if that happened, then only he, Warren Buffett, would own the clues to the culprit's identity.13 Not long after his hospitalization, on an exceptionally cold and windy day in May 1939, his parents told him to get dressed. Then his grandfather appeared. Clad in a dignified single-breasted suit, a handkerchief tucked neatly in his breast pocket, Ernest Peabody Buffett looked the picture of respectability, like the president of the Rotary that he was.

Ernest had a way with children, despite his stern air, and he liked to entertain his grandchildren. Bertie worshipped him. "We're going to Chicago today, Warren," he announced. They boarded a train and went to see the Cubs play the Brooklyn Dodgers in what turned out to be a marathon baseball game that went scoreless for ten extra innings, tied nine to nine, and was finally called on account of darkness. It had lasted for four hours and forty-one minutes.14 After this exciting introduction to major-league baseball, Warren was thrilled when Ernest bought him a twenty-five-cent book about the 1938 baseball season. Warren memorized it. "That was the most precious book to me," he says. "I knew every player's history from every team and could have told you clearly every word in that book. I knew it in my sleep."

His aunt Alice introduced him to another new interest when she gave him a book about bridge-probably Culbertson's Contract Bridge Complete: The New Gold Book of Bidding and Play.15 Contract bridge-a social, psychological game in which figuring out the problem is as important as solving it-was sweeping the country at the time, and Warren found it suited him more than chess.16 Yet another of his many interests was music. For several years, he had been learning to play the cornet; among his heroes were the trumpet players Bunny Berigan and Harry James. Although music practice meant spending time at home with his mother, trying to please someone who could never be pleased, he persisted, and there came a time, after many painful hours of practice peppered with Leila's criticism, that he was rewarded by being chosen to participate in his school's Armistice Day ceremony.

Each year on November 11, the anniversary of the treaty that ended World War I, the entire Rosehill student body went down to the gym for a ceremony honoring the war's dead heroes. In what had become a school tradition, trumpet players stationed at doors on either side of the gym would alternate playing "Taps," one blowing the first dum da dum notes, and the other echoing dum da DUM, and so on.

That year, Warren's cornet skills had advanced enough for him to be given the part of the echo. He woke up the morning of the event, exhilarated at the prospect of performing in front of the entire school. When the big moment came, he was ready.

As Warren stood in the doorway with his cornet, the first trumpet player sounded, Dum da DUM.

But on the second dum, he hit a wrong note.

"My whole life flashed before my eyes, because I didn't know what to do with the echo. They hadn't prepared me for this. Paralyzed-my big moment."

Should he copy the other trumpet player's mistake or embarrass him by contradicting what he'd played? Warren was undone. The scene scalded itself permanently into his memory-except for what he did next. Years later, which course he followed-assuming he played any note at all-had become a blank.

He had learned a lesson: It might seem easier to go through life as the echo-but only until the other guy plays a wrong note.

8.

A Thousand Ways Omaha * 19391942 The first few cents Warren Buffett ever earned came from selling packs of chewing gum. And from the day he started selling-at six years of age-he showed an unyielding attitude toward his customers that revealed much about his later style.

"I had this little green tray, which had five different areas in it. I'm pretty sure my aunt Edie gave me that. It had containers for five different brands of gum, Juicy Fruit, Spearmint, Doublemint, and so on. I would buy packs of gum from my grandfather and go around door to door in the neighborhood selling this stuff. I used to do that in the evening, largely.1 "I remember a woman named Virginia Macoubrie saying, 'I'll take one stick of Juicy Fruit.' I said, 'We don't break up packs of gum'-I mean, I've got my principles. I still, to this day, remember Mrs. Macoubrie saying she wanted one stick. No, they were sold only in five-stick packs. They were a nickel, and she wanted to spend a penny with me."

Making a sale was tempting, but not tempting enough to change his mind. If he sold one stick to Virginia Macoubrie, he would have four sticks left to sell to somebody else, not worth the work or the risk. From each whole pack, he made two cents profit. He could hold those pennies, weighty and solid, in his palm. They became the first few snowflakes in a snowball of money to come.

What Warren was willing to break up were red cartons of Coca-Cola, which he sold door to door on summer nights. He carried on selling them during family vacations, approaching sunbathers around the shores of Lake Okoboji in Iowa. Soda pop was more profitable than chewing gum: He netted a nickel for every six bottles, and stuffed these coins proudly into the ball-park-style nickel-plated money changer on his belt. He also wore it when he went door to door selling copies of the Saturday Evening Post and Liberty magazines.

The money changer made him feel professional. It emblemized the part of selling that Warren most enjoyed: collecting. Although he now collected bottle caps, coins, and stamps, mainly, he collected cash. He kept his coins at home in a drawer, sometimes adding to the $20 his father had given him when he turned six, all recorded in a little maroon passbook-his first bank account.

By the time he was nine or ten, he and Stu Erickson were selling used golf balls at Elmwood Park golf course-until somebody reported them and they got kicked out by the cops. When the police talked to Warren's parents, however, Howard and Leila weren't concerned. They just considered their son ambitious. As the Buffetts' only-and precocious-son, Warren had a sort of "halo," according to his sisters, and got away with a hell of a lot.2 At age ten, he got a job selling peanuts and popcorn at the University of Omaha football games. He walked through the stands yelling, "Peanuts, popcorn, five cents, a nickel, half dime, fifth of a quarter, get your peanuts and popcorn here!" The 1940 presidential election campaign was under way, and he had collected dozens of different WillkieMcNary buttons, which he wore on his shirt. His favorite read: "Washington Wouldn't, Cleveland Couldn't, Roosevelt Shouldn't," which referred to FDR's outrageous-to the Buffetts-decision to run for a third term. While the U.S. had no constitutional term limit, the country had-so far-rebuffed the idea of an "imperial President."3 Howard felt that FDR was a despot who had grandstanded his way to popularity. The idea of four more years of FDR nearly choked him.

Though he found Wendell Willkie too liberal for his personal tastes, Howard felt, Anyone to get rid of Roosevelt. Warren, who followed along with his father's political views, enjoyed showing off his WillkieMcNary buttons at the stadium. Then his manager called him into the office and said, "Take those off. You'll get a reaction from the Roosevelt people."

Warren put the buttons in his apron, where some of the dimes and nickels got wedged inside the backs of the pins. When he reported in after the game, his manager told him to dump out the contents of the pocket, pins and all. Then he swept them off the counter and took them away. "That was my introduction to Business 101," Buffett says. "I was pretty sad." And when Roosevelt won an unprecedented third term, the Buffetts were sadder still.

But while politics was Howard's main interest and money a sideline, for his son, those interests were reversed. Warren hung around his father's office at the grand old Omaha National Bank building every chance he got, reading "The Trader" column in Barron's and the books on his father's bookshelf. He planted himself in the customers' room of Harris Upham & Co. At this regional stockbroking firm, down two flights of stairs from Howard's office, he found it the height of glamour to be allowed to "mark the board," chalking stock prices on a slow Depression-era Saturday morning. The market still traded for a two-hour session on weekends. Root-bound men with nothing better to do filled the semi-circle of chairs in the customers' room, listlessly watching numbers crawl by on the Trans-Lux, an electronic display of prices of major stocks.4 Occasionally somebody would jump up and rip a handful of tape off the lazily clicking ticker machine. Warren arrived with his paternal great-uncle Frank Buffett-the family misanthrope who had been brokenhearted over losing Henrietta, now long dead, to his brother Ernest-and his maternal great-uncle John Barber.5 Each man was enslaved by his long-standing habit of thinking in only one direction.

"Uncle Frank was a total bear on the world, and Uncle John was a total bull. I would sit between the two of them, and they'd sort of vie for my attention and try to sell me that they were right. They didn't like each other, so they wouldn't talk to each other, but they would talk to me in between. My great-uncle Frank thought everything in the world was going to go broke.

"And when somebody'd go up there to the counter behind the chairs and say, 'I want to buy a hundred shares of U.S. Steel at twenty-three,' my uncle Frank would always boom out and say, 'U.S. STEEL? IT'S GOING TO ZERO!'" That was not good for business. "They couldn't throw him out, but they hated him around this place. It was not an office designed for short-sellers."

Snug between his two great-uncles, Warren stared at the numbers, which were fuzzy. His trouble reading the Trans-Lux led to his family's discovery that he was nearsighted. After being fitted for glasses, Warren noticed that the numbers seemed to change according to some immutable law of their own. Although his great-uncles were both eager to sway him to their respective-and extreme-points of view, Warren noticed that their opinions appeared to have no connection whatsoever to the numbers passing overhead on the Trans-Lux. He was determined to figure out the pattern, but as yet did not know how.

"My uncle Frank and my uncle John would vie for who would take me to lunch, because that was sort of beating the other guy. With my uncle Frank, we'd go down to the old Paxton Hotel, where we could buy day-old food for a quarter."

Warren, who enjoyed spending time with adults, relished being vied over by his uncles. Actually, he enjoyed being vied over by anyone. He craved attention from his other relatives and his parents' friends, but especially from his father.

Howard gave each of his children an East Coast trip at age ten, an important event in their lives. Warren knew exactly what he wanted to do: "I told my dad I wanted to see three things. I wanted to see the Scott Stamp and Coin Company. I wanted to see the Lionel Train Company. I wanted to see the New York Stock Exchange. Scott Stamp and Coin was at Forty-seventh Street, Lionel was down around Twenty-seventh, and the Stock Exchange was all the way downtown."

Wall Street in 1940 had begun to revive from the crash, yet remained a chastened place. The men of Wall Street were like a band of hardy mercenaries fighting on after most of their comrades had been felled in war. The way they made a living seemed vaguely disreputable with memories of the 1929 Crash so fresh in people's minds. Yet even though they did not brag about it outside the bunker walls, some of these mercenaries were doing very well indeed. Howard Buffett took his son down to lower Manhattan and dropped in on the top man at one of the largest brokerage firms. Little Warren Buffett was getting a peek inside the bunker's gold-plated doors.

"That's when I met Sidney Weinberg, who was the most famous man on Wall Street. My dad had never met him. He had this little tiny firm out here in Omaha. But Mr. Weinberg let us in, maybe because a little kid was along or something. We talked for about thirty minutes."

As the senior partner of the investment bank Goldman Sachs, Weinberg had spent a decade painstakingly repairing the firm's reputation after its disgrace for misleading investors with a notorious pyramid scheme in the market crash of 1929.6 Warren knew nothing about that, nor that Weinberg grew up an immigrant's child and had started as a porter's assistant at Goldman, emptying cuspidors and brushing the partners' silk hats.7 But he certainly understood that he was in the presence of a big shot once he found himself in Sidney Weinberg's walnut-paneled office, its walls hung with original letters, documents, and portraits of Abraham Lincoln. And what Weinberg did at the end of their visit made a huge impression on him. "As I went out, he put his arm around me and he said, 'What stock do you like, Warren?'

"He'd forgotten it all the next day, but I remembered it forever."

Buffett would never forget that Weinberg, a big shot on Wall Street, had paid such attention to him and seemed to care about his opinion.8 From Goldman Sachs, Howard took Warren over to Broad Street and through a set of enormous Corinthian columns into the New York Stock Exchange. Here, in the temple of money, men in brightly colored jackets shouted and scribbled standing around wrought-iron trading posts while clerks darted back and forth, strewing the floor with paper scraps. Yet it was a scene from the Stock Exchange dining room that captured Warren's imagination.