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 • 1936–1939
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 • 1939–1942
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 nette
d 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 Willkie–McNary 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.