By the time he was thirty-one years of age, Warren Buffett was already a millionaire.
Twenty-one years later, in 1982, he was ranked Number 82 in the Forbes 400 list of wealthiest Americans. It was his breakthrough year on that list.
By 1983 he had jumped up to Number 31 by doubling his net worth to $520 million.
In 1985 he became a billionaire, worth some $1.07 billion, and was Number 12.
By 1986 he had worked his way up to Number 5 on the list and was included by U.S. News & World Report on a list of one hundred people and families who owned the biggest stakes in Americaâs publicly traded companies. There Buffett ranked eighth.
In 1989, with $4.2 billion, Buffett was Number 2 on the Forbes 400 list.
In 1993 Buffett finally reached Number 1, taking Bill Gatesâs position. With $8.3 billion, he was officially the richest man in America.
Among the most amazing things about this plainspoken, sometimes witty, always sharply intelligent man was the fact that he did it all on his own without a fat inheritance to stake him. He did it by the simple means of investing money in successful companies.
In several other ways Warren Buffett was an unfamiliar figure on the Forbes 400 list. For example, he did not take part directly in Wall Street maneuverings as most of his peers did. Instead, after a certain amount of exposure to Wall Street, he moved back home to Omaha, Nebraska, and from there did all his buying and selling.
For that matter, in physical appearance he did not resemble his peers, either. Nor did he act like his competitors on the Street. For whatever reason, he clung tightly to the image of a rather humble, even simple, Midwesternerâhomespun, humorous, ever ready with an aphorism to illustrate his point, the Will Rogers of Wall Street.
After so many years of playing the homespun prophet, Warren Buffett had actually become that prophetâand it hadnât hurt him one bit.
Honesty and integrity were the two most important elements in the manâs character, according to one of his most trusted sources: himself, Warren Buffett. But it was not enough just to say that.
In Buffettese it came out this way:
âNever lie under any circumstances. Donât pay any attention to the lawyers. If you start letting lawyers get into the picture, theyâll basically tell you, âDonât say anything.â Youâll never get tangled up if you just basically lay it out as you see it.â
On the other hand, Buffett was always hedging his more pointed aphorisms just a bit. âNeverâ became âhardly everâ in this tribute to Seeâs Candy Shops, one of the companies he eventually owned, in which he told how âlittle white liesâ donât always count:
âWhen business sags, we spread the rumor that our candy acts as an aphrodisiac. Very effective. The rumor, that is; not the candy.â
Buffett also believed in loyaltyâand expected it of the people with whom he dealt. In Buffettâs book, when a friend was hurt, you went to bat for him. One anecdote proved his point.
âI ate lunch at the Omaha Clubâthatâs the downtown clubâand I noticed there werenât any Jews. I was told, âThey have their own club.â Now, there are Jewish families that have been in Omaha a hundred years; they have contributed to the community all the time; they have helped build Omaha as much as anybody, and yet they canât join a club that John Jones, the new middle-rank Union Pacific man, joins as soon as heâs transferred here. That is hardly fair.
âSo I joined the Jewish Club: it took me four months. They were a little put back and confused, and I had to do some convincing. Then I went back to the Omaha Club and told them that the Jewish Club wasnât totally Jewish anymore. I got two or three of the Jewish members to apply to the Omaha Club. Now weâve got the thing cracked.â
Buffett always was upbeat about his workâthat is, about investing his money. Did he like his work because it accumulated mountains of cash for him? Or was it something else? As a boy he had said:
âItâs not that I want money. Itâs the fun of making money and watching it grow.â
That was the key to Buffettâs character: making money. He didnât care about having it around, or spending it. He just loved to make it. Once, he was spending time on the West Coast and went as a tourist to visit San Simeon, the gigantic mansion that William Randolph Hearst had built as a repository for millions of dollarsâ worth of collectibles from all over the globe. After a long session of sight-seeing with the talkative guide, Buffett finally burst out:
âDonât tell us how he spent it. Tell us how he made it!â
For Buffett thereâs an artistic element to making money, a literal sense of creation.
âWhen I go to my office every morning, I feel like Iâm going to the Sistine Chapel to paint.â
He could be comical about money, too.
â[I] enjoy the process far more than the proceeds, though [I] have learned to live with those also.â
And, to cap it off, he did it his way.
âMy guess is that if Ted Williams was getting the highest salary in baseball and he was hitting .220, he would be unhappy. And if he was getting the lowest salary in baseball and batting .400, heâd be very happy. Thatâs the way I feel about doing this job. Money is a by-product of doing something I like doing extremely well.â
Vive le by-product!
Warren Buffettâs down-home dietary habits were deeply ingrained in him as a child, and after he grew up, it was obvious that nothing could change them. He quite honestly said:
âMy ideas about food and diet were irrevocably formed quite earlyâthe product of a wildly successful party that celebrated my fifth birthday. On that occasion we had hot dogs, hamburgers, soft drinks, popcorn, and ice cream.â
About the famous âDusty Sundaeââa Buffett SpecialâHersheyâs chocolate syrup poured over vanilla ice cream, with a layer of malted milk powder over that, he had this lesson to expound:.
âMy caloric consumption produced by this concoction is inconsequential. Assume that your basal metabolism rate is twenty-eight hundred calories per day. Simple arithmetic tells us that you canâindeed you mustâconsume slightly over 1 million calories per year. In my own caseâwith a life expectancy of about twenty-five yearsâthis means that, in order to avoid premature death through starvation, I need to eat some twenty-five million calories. Why not get on with it?â
Being a gourmet was the farthest thing from his mind from the start. In New York, where the prize targets for gourmets of every size and shape exist, Buffett would eat with friends at the Stage Deli, where he would inevitably order a âroast beef with mayo on white bread.â Once, one of his friends, trying to woo Warren over into the forbidden gourmet gardens, suggested a Japanese steak house.
Buffett: âWhy donât we go to Reubenâs?â
âWe ate there yesterday.â
âRight,â Buffett rejoined. âYou know what youâre getting.â
âBy that logic, weâd go there every day!â the astounded gourmet observed.
âPrecisely. Why not eat there every day?â
Malcolm Forbes once brought a fancy wine to a dinner at Kay Grahamâs houseâa wine bottled the year she was born. He said it cost him a bundle. When the waiter got to Buffett, Buffett put his hand over the glass.
âNo thanks,â he said with that little elfin grin. âIâll take the cash.â
If food was a bore to Buffett, clothes were even less significant. He saw clothes not as enhancements of the personality but as covers of the flesh. And he never tried to hone or re-create his image through fashion. As he frankly admitted:
âOne of the things that attracted me to working with securities was the fact that you could live your own life. You donât have to dress for success.â
Even though he does sometimes wear Italian-made Zegna suits that sell for about $1,500, you can always be sure that the Buffett you see today will be basically the same Buffett youâll see tomorrow.
Warren Buffettâs determination to appear casual caused him to have numerous battles with people who wondered why he dressed so drably, so Omaha-ian, as it were. He would appear in sneakersâcalled tennis shoes in those dim and distant days. He would wear a shirt unbuttoned at the neck, with his sleeves rolled up.
And when he climbed into more conventional attire for visits to New York or other big cities, he would look scruffy, to say the least. One journalist even called him on it. But Buffett had a comeback:
âI buy expensive suits. They just look cheap on me.â
Recently the Omaha Press Club produced a caricature of Warren Buffett by the artist James Horan. Buffett studied it for a moment. It had caught his own unkempt appearance, and in particular his careless, off-the-rack style of haberdashery. He laughed.
âAlmost anything beats looking in the mirror.â
Perhaps because he worked his way up from nothing all by himself, Warren Buffett decided after he had become a millionaire many times over not to dump all his gains on his children and members of his family. He once called inherited wealth âfood stamps for the rich.â
âAll these people who think that food stamps are debilitating and lead to a cycle of poverty, theyâre the same ones who go out and want to leave a ton of money to their kids.â
Rumors spread that Buffett had cut his children off with nothing. Buffett saw it differently.
âTheyâve gotten gifts right along, but theyâre not going to live the life of the superrich. I think they probably feel pretty good about how theyâve been brought up. They all function well, and they are all independent in that they donât feel obliged to kowtow to me in any way.â
Nevertheless, he realized that he might have underestimated his offspringsâ tolerance just a mite. He once explained his âfood stampâ philosophy to a group of college students, and then concluded:
âMy kids will be glad to come and rebut this next week.â
Buffett has always believed in starting a career earlyâjust as he did.
âIâd been interested in the stock market from the time I was eleven, when I spent some time watching the market and marking the board at Harris Upham, a New York Stock Exchange firm that was in the same building as my dadâs firm, Buffett-Falk & Company.â
As for his kids, Buffett must have done something right in bringing them up. Susie married, worked for Century 21 in real estate, and then began raising a family. Howard was an entrepreneur from the start, establishing Buffett Excavating, working for Seeâs Candy Shops in Los Angeles, then returning to Omaha to marry and start a family. Peter was always interested in music, and became a professional musician, playing piano with a fifteen-piece band.
Job satisfaction has always been an important concern for Warren Buffett. He chose to work always with people he liked to work with. He selected his associates carefully. In the long run, his care paid off. He told a reporter once:
âI believe in going to work for businesses you admire and people you admire. Anytime youâre around somebody that youâre getting something out of and you feel good about the organization, you just have to get a good result. I advise you never to do anything because you think itâs miserable now but itâs going to be great ten years from now, or because you think âIâve got X dollars now, but Iâll have 10X.â If youâre not enjoying it today, youâre probably not going to enjoy it ten years from now.â
Buffett incorporated that advice into a speech he later gave at several colleges around the country. One of the colleges happened to be Harvard. A question came up from the floor:
âWhom should I go to work for?â
Buffett takes up the story:
âI said go to work for whoever you admire the most. I got a call from the dean about two weeks later. He said, âWhat are you telling these kids? Theyâre all becoming self-employed.ââ
(Harvard Business School in fact had turned Warren Buffett down when he applied for admission in his early years, and he never forgot that slight. Anti-Harvard flak crops up in little asides and comments again and again in his later life. It is always something of an inside joke with himâas many of his sayings are.)
One of the men Buffett came to admire most eventually became his partner in the investment business: Charles T. Munger. The two men contrasted in simple blacks and whites: Buffett was a Democrat, although his own father had been a Republican and had served in the U.S. House of Representatives; Munger was a Republican. Buffett was rejected by Harvard Business School; Munger went through Harvard without even havi...