1. He’s just like you and me, except for the
£31bn fortune
PROFILE: Warren Buffett
When F Scott Fitzgerald observed that “the very rich are different from you and me”, the
novelist was clearly not thinking of people like Warren Buffett. Proclaimed the world’s richest
man last week, the American investment strategist eats at his local grill and drives to work
from the modest home that he bought in unfashionable Omaha, Nebraska, in 1958, which is
today valued at about £350,000.
Such is the frugality of the 77-year-old “sage of Omaha”, whose wealth increased by £5 billion
last year to £31 billion, that when he married in 2006 he bought a discount ring from his own
jewellery company. He has vowed to pass on only a small chunk of his fortune to his children,
Susie, Howard and Peter. He wants them to have “enough to do anything but not to do
nothing”.
His advice has enriched more investors than anyone else in history, but Buffett pays himself a
mere £50,000 a year and prefers such ordinary fare as steaks and hamburgers, washed
down with Cherry Coke. Not for him the bright lights of New York, even though he owns a
private jet, his one extravagance: “I have everything I need and am very comfortable right
here at home in Omaha. I feel sorry for people who are consumed by possessions.”
Known for his wry homilies, Buffett has bet his house in jest against that of his friend and
bridge partner Bill Gates, the Microsoft co-founder now relegated from first to third place in
the zillionaire stakes, according to Forbes magazine. They used to meet for games at a
Holiday Inn near Buffett’s home, but of late they play online - Buffett’s only concession to
newfangled technology - under the user names “T-bone” (Buffett) and “Challenger X”.
Buffett’s ranking may seem puzzling, given that in 2006 he announced he was donating his
fortune to charity, with about £15 billion going to the Bill and Melinda Gates Foundation,
dedicated to combating Aids, tuberculosis and malaria. The donations are in instalments - the
latest for £880m - but Buffett just gets richer.
This act of philanthropy was an indirect consequence of Buffett’s unorthodox role as a
husband and lover. In 1952 he married Susan Thompson, a former cabaret singer who, after
raising their children, announced in 1977 that she was leaving Omaha to pursue her singing
career in San Francisco. They remained married and on good terms, holidaying together and
helping charitable groups.

2. Buffett had always expected that Susan would inherit his wealth and pass it to charitable
causes, he explained later: “When we got married, I told Susie I was going to be rich . . . [not]
because of any special virtues of mine, but simply because I was wired at birth to allocate
capital.” Susie was less than thrilled by this prospect: “But we were totally in sync about what
to do with it - and that was to give it back to society.”
In 1978 Susan introduced her husband to Astrid Menks, a Latvian working as a waitress in a
restaurant, who soon moved in with him. Buffett sent out Christmas cards signed “Warren,
Susie and Astrid”.
Two years after Susan died from a stroke in 2004, Buffett married Astrid, then 60. “Astrid
loves him and takes care of him,” his daughter Susie said. “If Warren didn’t have a cent she’d
still be with him.”
Just before their wedding, he revealed his plan to release his ever-growing riches to
charitable causes for decades to come.
Buffett likes to make wealth-generation sound simple. He once summed it up thus: “Rule No
1: never lose money. Rule No 2: never forget rule No 1.” His prescience is world-renowned:
he refused to buy stocks in the booming 1960s, only to strike gold in the plummeting 1970s.
He walked away from the dotcom boom in the 1990s, sticking with boring blue-chips such as
Gillette, Coca-Cola and American Express. He always came up smelling of greenbacks.
He is one of the most respected voices in financial America, embodying Midwest virtues of
probity, modesty and common sense, so his recent warning that America was in recession
stirred panic. His utterances attract 20,000 acolytes to the annual meeting of his business
empire, dubbed the “Woodstock of capitalism”.
A journalist who attended recalled: “He was amiable, chatty, and spoke for four hours off the
top of his head. He is what he seems: a modest and ferociously bright man to whom money is
an intellectual pursuit, not something to spend.”
Buffett is a Democrat who has funded the pro-choice group Planned Parenthood and has
raised money for both Hillary Clinton and Barack Obama, rivals for the party’s presidential
nomination, without endorsing either. He would be happy whichever won, he said. Yet he
remains a close friend of Arnold Schwarzenegger, California’s Republican governor, whom he
served as an economic adviser in 2003.
If anything gives him sleepless nights, it is the certainty that a nuclear holocaust will wipe out
the planet. “It is the ultimate depressing thing. It will happen, it’s inevitable,” he said,
reasoning that as the number of “bad guys” increases, so do the odds of one obtaining an
atom bomb.

3. He was born in 1930 in a house in Omaha on the banks of the Missouri River, the son of Leila
and Howard, a Republican stockbroker elected to Congress on a platform described as “to
the right of God”. His grandfather ran the family’s grocery store dating from 1869, where
Buffett’s fortune began.
“My grandfather would sell me Wrigley’s chewing gum and I would go door to door around my
neighbourhood selling it,” he recalled. “He also sold me a six-pack of Coca-Cola for a quarter
[25c] and I would sell it for a nickel [5c] each, so I made a small profit.” He supplemented his
earnings by selling lost golf balls. When the family moved to Washington, the 12-year-old
Warren took on five paper rounds, using his access to customers to sell them magazine
subscriptions.
By the following year he was making £80 a month, an incredible sum in the 1940s. Through
shrewd investment, at the age of 14 he saved the £400 needed to buy 40 acres of local
farmland, which he rented out. His first dabble in the stock market earned him a $2 profit
before the shares shot up, teaching him that patience pays off.
After a first degree at the University of Nebraska Lincoln, he went to Columbia Business
School in New York, where he fell under the spell of Benjamin Graham, an investment guru
who awarded Buffett the only A+ grade he ever bestowed.
Buffett worked for his mentor after graduation but outgrew him, according to Roger
Lowenstein, Buffett’s biographer: “Graham would amaze the staff with his ability to scan a
page with columns of figures and pick out an error. But Buffett was faster at it.”
His strategy was to search for “cigar butt” companies, no longer of interest to the market and
thus undervalued, but which still had “a few puffs” left in them.
In 1962 he spotted a run-down Massachusetts textile firm, Berkshire Hathaway, which he
bought and transformed into an insurance company. His empire now extends to sweet shops
and Fruit of the Loom clothing. He has shares in The Washington Post, Tesco and a
controlling stake in CE Electric, which supplies energy to 3.7m English homes.
He denounced the “outright crookedness” of Enron, the collapsed American conglomerate,
and the dubious methods used by corporations to calculate pension charges and stock option
costs: “CEOs will be respected and believed . . . only when they deserve to be. They should
quit talking about some bad apples and reflect instead on their own behaviour.”
This rigour extends to his family dealings, notably his past stinginess with his children. On one
occasion his daughter Susie needed $20 to get her car out of an airport car park, but Buffett
made her write a cheque to him first. He doesn’t spare himself either: “Only my clothes are
more expensive now, but they look cheap when I put them on.”

4. Buffett has critics, drawing flak over his profits from PetroChina, the oil company with links to
Sudan’s government. His recent offer to stand behind America’s municipal bond payments,
issued by local councils, was seen as a self-serving gesture – only one such bond on average
has gone into default over the past 40 years.
To most Americans, however, Buffett is a national treasure. But as he put it: “You only learn
who has been swimming naked when the tide goes out.”