Warren E. Buffett (1930–)

The president of the United States called his plan to raise taxes on the wealthythe “Buffett Rule.” Barack Obama was referring to the “Oracle of Omaha,” Warren E. Buffett, the 81-year-old billionaire investor who pointed out in a New York Times op-ed piece in 2011 that the megarich were paying taxes at a lower rate than their own employees were, an average 36 percent rate compared to the 17.4 percent Buffett said he paid in 2010. He argued that the rich should pay at least the same percentage of their earnings as middle-class Americans do.

Though President Obama’s plan would affect only 0.3 percent of American taxpayers, he and Buffett pointed out that this change would have a significant impact on the long-term paydown of the United States’ deficit. If the plan survived partisan attack, it would become one more significant milestone in Buffett’s career and influence as the United States’ investment guru. His view of the American economy is revered because he has been such a canny investor himself over the last five decades. A financial genius, he has been the folksy voice of common sense about money. He was a math whiz from an early age and still calculates columns of numbers in his head. He bought his first shares of stock when he was 11 years old.

Buffett is ranked number 2 on the Forbes 400 list of “The Richest People in America,” second only to Bill Gates of Microsoft. He is the CEO and chairman of Berkshire Hathaway, a conglomerate holding company that is the eighth largest company in the world and, according to Barron’s, the most respected. Major holdings of the company, which started as a textile manufacturing firm, include insurance companies like GEICO and companies like Benjamin Moore paints, Dairy Queen, NetJet, and energy, apparel, and construction companies. Berkshire Hathaway also owns substantial stock in such blue-chip American brands as Pepsi, Coca-Cola, Kraft, and others.

Along with his friend Bill Gates, Buffett embarked on a campaign in 2010 to persuade other wealthy Americans to pledge 50 percent of their wealth to charity. He himself had already made the largest charitable contribution in history, pledging the equivalent of some $30 billion in Berkshire Hathaway stock to the Bill and Melinda Gates Foundation in 2006. Buffett, Gates, and Mark Zuckerberg of Facebook signed a pledge in 2010, the Gates–Buffett Giving Pledge, to give away half their wealth over time.

The folksy voice of common sense about money, Warren Buffett is also a financial genius whose canny stock investments have ranked him no. 3 on the Forbes Top Twenty list of The Richest People in the World.

The folksy voice of common sense about money, Warren Buffett is also a financial genius whose canny stock investments have ranked him no. 3 on the Forbes Top Twenty list of “The Richest People in the World.” (AP Photo)

Nonetheless, Buffett does not give away money very often—there are no buildings or athletic fields or scholarship funds named after him—nor does he spend money on himself. He still lives in the five-bedroom house in Omaha he bought in 1958 for $31,500. There is no art collection. He drives his own car and does not have a cell phone or a computer on his desk. He likes Cherry Coke and hamburgers and plays bridge 12 hours a week. He wears sneakers and pretty much always has. When Warren Buffett finds something that works, like his house or a Coke and hamburger, he sticks with it.

Buffett has said his own children can expect a small inheritance but not enough to “spoil” them. As he told television host Charlie Rose, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.” Similarly, while his children were growing up, Buffett did not freely hand out money. Once when his daughter Susie asked to borrow $20, he loaned it to her but made her write him a check for it. “I don’t believe in dynastic wealth,” he told the New York Times, calling those who grow up in wealthy circumstances “members of the lucky sperm club.”

Buffett called the 2008 financial crisis “poetic justice,” in that “the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end,” he told Reuters at the time. He is most concerned, he says, about the country’s trade deficit that threatens to undermine the dollar and put more ownership in the hands of foreigners. Buffett stood behind the 2008 bank bailout package to avert what he called “an economic Pearl Harbor,” and stepped in to keep Goldman Sachs afloat by investing $5 billion in its stock. In an op-ed piece in the New York Times that fall, “Buy American. I Am,” Buffett advised, “Be fearful when others are greedy, and be greedy when others are fearful.”

One of his biographers, Roger Lowenstein, said that Buffett “rediscovered the art of pure capitalism—a cold-blooded sport, but a fair one.” Those who invested with him have gotten rich too. Indeed, a cult has grown up around Warren Buffett. He has done what is generally regarded as impossible, outperformed the stock market. Buffett has been investing since the 1950s and manages to explain how he did it in terms the ordinary American could understand. He is the polar opposite of financial moguls like J. P. Morgan and seems to embody that favorite American figure of a plain spoken Midwesterner like Will Rogers who can give Easterners a run for their money.

Even as a young boy growing up in Omaha, Nebraska, where he was born on August 30, 1930, Buffett exhibited an unusual facility and interest in numbers. Sitting on the front porch with a boyhood friend, he would write down all the license plate numbers of the cars going by. In church, Warren amused himself by calculating the life spans of composers noted in the hymnal. He loved to play Monopoly. Even bouncing a ball was an occasion for counting.

As biographer Roger Lowenstein observes, it was not just numbers Buffett liked. He liked money. As a boy, he set up a lemonade stand outside his house. He sold pieces of gum. He worked as caddy for the rich men at the country club, keeping an eye out for any used golf balls he might sell. While his family was thrifty, little Warren’s attention to money and his ability to calculate and remember huge columns of numbers was remarked on. His little sister, Roberta, said that she thought it was in his genes.

Buffett’s father, Howard, sold securities for a local bank until the Depression shut the bank down, just before Warren’s first birthday. Howard, with a partner, opened his own brokerage firm in downtown Omaha, but few people then were willing to risk money in the stock market. These were difficult years for the nation, with unemployment high and farmers lined up at soup kitchens, and these were hard times at home as well. This seemed to have an indelible effect on Warren who “emerged from those first hard years with an absolute drive to become very, very rich,” as Lowenstein says.

He was the second of the Buffett children, with an elder sister, Dora, and younger one Roberta. His mother, Leila Stahl, was a sweet and cheerful woman but prone to inexplicable rages, mostly directed at her children. Warren and his sisters endured terrible scoldings. At the same time, their father felt his responsibility to raise children of good moral character. Warren idolized him, and his father took a special interest in educating him, at one point taking him to visit the New York Stock Exchange in New York City when he was only 10 years old. The next year, Warren bought his first stock and some for his sister Doris too, purchasing three shares for each of Cities Service, a utilities company. He sold it when he had made a $5 profit, too soon, as the stock kept on climbing, a lesson learned.

When Howard was recruited in 1942 to run for Congress—and won—he moved the whole family to a new home in Fredericksburg, Virginia. Warren was so home-sick, his parents agreed to let him go back to Omaha and live at his grandfather’s to finish eighth grade. While he was there, he also worked in his grandfather’s grocery store, Buffett & Son. But the next year, he had to return to his family in Washington and, deeply unhappy, he ran away from home with two other boys. They hitchhiked to Hershey, Pennsylvania, where Warren heard there were golf courses. They stayed overnight but were picked up by the police the next day and sent home.

Back in Washington, Buffett got himself a paper route, delivering the Washington Post. Then he acquired a second paper route and eventually had five routes and 500 papers to deliver every morning before he went to school at Woodrow Wilson High. He also went into business with a friend to rent out pinball machines, at one point selling them all at a profit.

His father, now reelected to Congress for the third time, insisted that Warren go to college upon graduation from high school and sent him to the Wharton School of Finance and Commerce at the University of Pennsylvania. The younger Buffett stayed for two years, but complained that he knew more than his professors who had theories but no practical experience. He left Penn and went home to Omaha, transferring to the University of Nebraska in Lincoln where he graduated at 19 with a BS in business administration. At this point in his life, he had already amassed $9,800 in savings (the equivalent of $90,000 in today’s dollars).

Hearing that Benjamin Graham, the author of his favorite book on investing, The Intelligent Investor, was teaching at Columbia University, Warren enrolled, graduating with an MS in economics in 1951 (he had gotten the only A+ Graham ever gave out in 22 years of teaching). He was just 21. He went to work for his father’s brokerage firm in Omaha and courted Susie Thompson, a minister’s daughter whom he married in 1952. They had three children, Susie, Howard, and Peter. Buffett moved on from his father’s firm to join his mentor, Benjamin Graham, in a partnership that would be the beginning of his wealth-building strategy with Buffett Partnerships, Ltd. By 1962, Buffett was a millionaire because of, by then, his seven partnerships.

He consolidated them into one and secretly began to buy up stock in Berkshire Hathaway, a textile mill in New Bedford, Massachusetts. Its stock was down but its prospects were good, and by 1965, Buffett owned it. He began to acquire other companies, including insurance companies, and bought stock in others like Capital Cities’ ABC network, Salomon Brothers brokerage, and the Coca-Cola Company. Buffett was also a large stockholder in the Washington Post Company and became a trusted confidant of publisher Katharine Graham. By 1990, Warren Buffett was a billionaire, and in 2008, he became the richest man in the world, at the top of the Forbes 400 list, with a fortune of $62 billion, beating out Bill Gates.

During the financial crisis in the fall of 2008, Buffett came to the rescue by buying 10 percent of the preferred stock of Goldman Sachs as well as stock in General Electric, but he lost his top slot on the Forbes 400 as the economy “had fallen off a cliff,” and his investments suffered. Buffett is still worth $39 billion (to Gates’s $59 billion).

Warren Buffett’s personal life suffered a major setback in 1977 when his wife of 25 years walked out. She rented an apartment in San Francisco and pursued the singing career that she had already launched in Omaha where she had been singing at the French Café downtown. Buffett was devastated. His daughter, Susie, tried to take care of him, even asking a waitress at the café, Astrid Menks, to look in on him. Within a year, Astrid had moved in with Buffett, though he and his wife Susie continued to see each other. She apparently encouraged his relationship with Astrid (one year, they even sent Christmas cards signed “Warren, Susie, and Astrid”). When Susie died in 2004, Warren married Astrid, his 30-year live-in girlfriend, just before his 76th birthday in 2006.

President Obama awarded Warren Buffett the Presidential Medal of Freedom in 2011. Buffett was listed in Time magazine’s 100 Most Influential People in the world in 2007. The Museum of American Finance on Wall Street has enshrined a memorable “Oracle of Omaha” Buffett quotation on one of its plaques: “Remember that the stock market is manic-depressive.”

—Mary Cross


Buffett, Warren E. “Buy American. I Am.” The New York Times, October 16, 2008. http://www.nytimes.com/2008/10/17/opinion/17buffett.html .

Lowenstein, Roger. Buffett: The Making of an American Capitalist. New York: Random House, 1995.

Thomas, Landon, Jr. “A $31 Billion Gift between Friends.” New York Times, June 27, 2006. http://www.nytimes.com/2006/06/27/business/27friends.html .