THE BILLIONAIRE LIFE OF Warren Buffett Finance Money Biography (Full BBC documentary)

[Music] he's been called The Oracle of Omaha the sage of Nebraska and from a young age he knew he would be rich I could figure out when I was 10 if I had a fairly long life I was going to end up with a lot of money he was right 70 years later he was the richest man in the world a tycoon with a rockar aura I've never known anyone as focused as he is it's amazing he wants to be the best he can be at what he's doing and what he's doing happens to make

a lot of money Warren's very young and energetic Warren is super interested in the latest things going on and there's so much that you just absorb from Warren's approach to things but among all those winning bets there have also been dramatic brushes with financial disaster both the company and I personally promised treasury that we would aggressively help them in finding out anything we've done wrong in the past and to make very sure that it doesn't happen in the future I was scared I was scared stiff there were a lot of people that wanted us to

go out of business over that weekend and I didn't know what was going to happen and behind his folksy demeanor there's one of America's shrewdest and toughest businessmen you don't make $40 billion by being Mr Rogers or by being one of the Muppets Warren takes no prisoners when it comes to a negotiation he uses Every bit of Leverage that he can [Music] this is going to be one of those days that lingers in the mind way the Dow was down 2 or 300 nobody knows what's in these bundles a category 5 test of our financial

L it was a terrifying moment in US Financial history in 2008 some of wall Street's biggest banks and investment firms were about to fail threatening to take much of the world's economy down with them inside the Citadel of money and power desperate calls for help went out to the same person as dramatized in this HBO TV movie we're thinking of reaching out to Warren Buffet great you and Buffet go back right do me a favor and call him tell him leing this Rock Solid during the days that the financial crisis was unfolding he was viewed

as the go-to person if you're in trouble Warren Buffett can save you for most of his life Buffett avoided the Wall Street ways of risky speculation in fact he stayed far away from Wall Street itself Warren really is a product of Omaha especially in the era that he grew up there the virtues of the modesty thft plain spokenness and Warren really exemplifies those Warren Buffett still lives and Works just a short distance from where he was born in 1930 and it was here in Omaha that he began his obsession with all things Financial it hit

me right away it was like kids that like to play the piano early or something of the sort I always like numbers I I knew I was going to be interested in stocks the rest of my life but probably at the time I was you know eight or nine I used to keep charts on all kinds of stocks when I was uh that age my aunt gave me a a World Almanac so I I memorize the population of all cities of any real size but I just like numbers it it was it was not limited

to business numbers at all Buffett also had The Uncanny ability to remember all those numbers and how they fit into the big picture a skill that would be the Bedrock of his later success former Wall Street analyst Alice Schroeder is the author of The Snowball Buffett's authorized life story Warren grew up in the Great Depression the family did not have money at all because his father had lost his job as a stock broker and so around the dinner table money was what they talked about but Buffett wanted to do more than talk my grandfather had

a grocery store and I used to buy Coca-Cola from them in six packs for a quarter and sell them for a nickel each I sold the Saturday evening post door to door I sold ladi's Home Journal I had all kinds of little Ventures not all not all hugely successful I might add I like doing business early on journalist Roger Lowenstein wrote an early biography of Warren Buffett then he gets into more exotic things things he collects golf Ball he gets other kids in the block to do that with him they they collect golf balls and

resell them he's picking up stubs at the racetrack when he's 10 11 12 cuz some of them haven't been used yet he grows up knowing he wants to make money you know investing in business comes later but it's in him Buffett made enough from these Ventures to do what until then he had only dreamed of doing playing the stock market first stock I bought was City service preferred it was a stock that had passed the dividend for how many years 20 years or something like that and so it had large accumulated dividends and it was

selling at 38 and a quarter and I bought three shares I went all in that was all the that was my entire net worth at the same time Buffett's stock broker father Howard Buffett had won a seat in Congress as a Conservative Republican and in 1943 he took the family to Washington it was a chance for Warren to start a new business delivering papers for the Washington Post well I start with a couple of routes cuz I was good about delivering papers on time so then they gave me these absolutely Prime routes got up to

where I was making probably $1 $50 a month or something which was a lot of money and that and I was making it all before I went to school in the morning in the morning so it was good savings from those paper Roots became the seed money for his later Empire I'd made 9800 and I I made most of that delivering papers I delivered about 500,000 papers and I made made about a penny a piece so I made about $5,000 for the delivery of papers After High School he was ready to Go full time as

a businessman and investor but his father convinced the 16-year-old Buffett to go to college first at the warten school of the University of Pennsylvania he roomed with fellow Nebraskan Charles Peterson he was very immature he wore tennis shoes or if he wore shoes other than that he had a hard time having them both be the same color he made have a black and a brown shoe on and never know the difference hair messed up but Buffett was way ahead when it came to academics uh every day after class I'd spent so many hours studying War

and the contrary uh picked up the the books that are appable to him and uh sat there and flipped through him Page by Page uh and he might be through two or three courses in a in a couple weeks he had a photographic uh uh mind uh I did not and Buffett had a unique way of spending all those hours he did not have to study at that time he was crazy about El jolon and he'd play those records mamy mamy how I love you mamy and miming an hour after hour and what other songs

and that time was ready to go crazy and when he wasn't singing Buffett was getting his first taste of political activism I was president of the young Republicans Club at the you know univ of Pennsylvania and then I even ran for delegate to the National Convention one time as a republican after breezing through college Buffett went to interview for Harvard Business School I was 19 at the Time and the fellow spent about 10 minutes with me and he said you he said you better come back again later it was very clear I'd flung the [Music]

interview after being rejected by Harvard Buffett set his sights on Colombia's business school where Wall Street Maverick Benjamin Graham was a professor Graham's investment philosophy was simple but it defied conventional Wall Street wisdom many people take their cues as to what to do from what the market itself is doing but Graham would would tell you that the market is is there to serve you not to inform you and basically he was saying the market will be wrong now that flies in the face of what a lot of other people think but Graham would say that

sometimes the market is very very wrong and if you look at the prices of stocks as buying pieces of businesses you will be able to recognize when the market is very wrong Graham's way was to find undervalued stocks that were off the radar and Buffett became his most devoted disciple he taught us to find a dollar bill that was going to be you could buy for 50 cents but the dollar bill wouldn't necessarily increase in value very fast and I I analogize that to essentially walking down the street looking for cigar cigar butts with one

puff left in them and they weren't very attractive and and there was maybe only one puff in them but they didn't cost anything armed with the Graham philosophy Buffett headed back to Omaha to start his own business he said I'm Going to form a partnership and he said would you want in I said sure I do there was only 78 people in that original partnership convincing people beyond the first seven in ERS got rockier my sales pitch wasn't very effective I was I was 20 years old I looked like I was about 16 and I

probably behaved like I was about 12 so I would go around and call on people they were always nice to me but I would see a Mr Smith and and uh I would go through all these facts and figures about why you should buy some stock and when I got all through in my head I would count to three I would go one two three and then Mr Smith would say what does your dad think and I'd always want to hit him but it was frustrating Buffett knew that he had to be a better salesman

so he turned to popular self-help Guru Dale Carnegie well I I I had to be able to communicate with people better and I mean in groups particularly I just knew that I couldn't go through life terrified of public speaking and I I'd heard about the Dale Carnegie of course and he applied those lessons when he began dating Hometown girl Susan Thompson I mean I proposed to my wife during during the Dale Carnegie course so I mean I got my money's worth right right off right during the course I had the intellect to succeed but I

didn't I I did not have the Persona I was not put together as a person until I met her Buffett was finally ready to put his career in gear he was picking stocks that others were ignoring and his stocks kept going up little by little words spread around Omaha that the kid knew What he was doing he's devouring every annual report and they stay devoured he remembers them and you know he he's got these balance sheets in his mind so that if a stock gets cheap you know 3 years later he remembers what the fundamentals

of the company are this is a buy now in the first 5 years that Buffett was in business the Dow Rose by 74% while Buffett's Investments had gone up 250% in 1961 at the age of 30 he reached millionaire status friends like Stan lipy saw that he was still operating as a one-man band his study was right off the bedroom in their house he wasn't even in a office building at that point and they had three kids and people joke about Warren not knowing his kids and that's of course a great exaggeration but the fact

of the matter Susie stabilized the family so that Warren could do the studying that he needed his wealth was growing rapidly but you couldn't tell that from the way the family lived their home which Buffett still living lives in was bought over 5050 years ago for $332,000 his children all went to Public Schools suszie Buffett is the eldest of three Buffett children we grew up in a way that uh I think is probably different than most kids if you've got a dad who has what my dad has I mean we didn't get cars when we

turned 16 we didn't we didn't live any differently really than most of the other kids we knew the biggest change in the Buffett household was that war war was moving away from the staunch republicanism of His father civil rights had the biggest effect on changing my my views on politics neither party necessarily covered themselves with Gloriana but it was clear to me that a basic change a really basic change in Civil Rights was called for and the Democrats seem to be much more attuned to that than the Republicans and Buffett was about to make an

even bigger change in his professional life in his third Buffett wanted more than just being a stock picker he wanted to find companies that he could buy a controlling interest in and he found one 100 miles away in beatric Nebraska themer Mill was a a company that was really not doing very well it was in the windmill business of windmills now have come back but it was not a good business to be in 50 years ago but the stock was selling very cheap so I started I started buying stock in that it was a business

that had built up a lot of inventory that it didn't need and it had a labor force that was too big so it was a company that just needed to be downsized and of course the town that it was in was very small and it was the main employer a hundred people lost their jobs and Buffett took the heat what it Tau Warren Buffett was that he did not want to get involved anymore in businesses that had labor problems where he would have to fire people where he would have to get involved personally in the

management he wanted somebody else to do that it became another guiding principle of Buffett's evolving master plan buy businesses whose management you trust enough to leave in place Buffett's next big investment also Looked like a potential failure it was a textile mill called Berkshire Hathaway whose stock was selling for $7.50 a share we bought a textile company that was destined eventually to go out of business just like every other New England textile company did it was a mistake Glen Tong is a managing partner for T2 Partners Berkshire haway was not a good business they didn't

have a competitive advantage that allowed them to earn a sufficient return on the capital invested in the business so while they were profitable to some extent that profitability was inexorably being squeezed when the cash was extracted out of Berkshire hathway it was reinvested first major reinvestment that was enormously profitable was the insurance business and that drove everything that Berkshire hathway did from then on Andrew fry is a reporter for Bloomberg News so I moved the company basically from textiles to insurance and part of the reason was because the industry itself generated profits but also because

through the premiums that they gathered up from their policy holders buffet was able to take that and make his stock Investments it's called the float money comes in interest free from insurance premiums which then gets invested in other businesses and while the textile mill eventually died he kept the name Burkshire Hathaway which would live on as the name of his soon Tobe multi-billion dollar company rather than try and rename it every few years based on what I just bought uh why not just stick with the original people uh people know what Burkshire otherways about it

Says so much about him about Buffett that he sticks with birkshire Hathaway anyone else they would have gone to you know BH Diversified resources um he likes it he likes the history of the company he's not a anging Buffett was now on a roll buying Bargains like se's candies and Blue Chip Stamps a popular Shoppers loyalty program of that era like the insurance business it delivered interest free cash that could be used for future Investments I think I have just enough books it's quite a business and he'd found a professional partner who was as Market

Savvy as he was Charlie Munger who was working as a lawyer when the two first met well Charlie merer actually grew up a half a block from where I live he worked at my grandfather's grocery store as did I but he was six years older and I never knew him at all in Omaha and then through a mutual friend uh we got introduced in about 10 minutes I knew that this guy and I were going to do a lot of things together over the years when I met Warren he immediately started telling me how much

better his way of making a living was than mine and that I was too smart to stay in such a silly business as law prac when I could go into his business of running an investment partnership and it took me about 2 or three years to to uh realize he was right in the late 1960s Wall Street was in the midst of an unprecedented boom stock prices were soaring as everyone rushed into the stock market but for Buffett it was time to get out I was running a little over $100 million and had a lot

of happy partners and I wrote letter and I said you know I don't know how to play in this game anymore the valuations have gotten uh to where I can't find things I terminated my partnership in 1969 it seems counterintuitive but Warren has always quoted Gus leevy who said be greedy when others are fearful be fearful when others are greedy and Warren knew that the party would come to an end and at some point the bubble would burst Buffett was 40 years old and was worth more than $25 million but without the Partnerships to oversee

he started getting restless and in 1973 made a fateful decision to buy into a California Bank called Wesco the problem was Wesco was in the middle of a merger deal with another company and the next thing you know the company that was going to buy Wesco complained to the Securities and Exchange Commission that Warren was trying to bust up their merger which would have been illegal and so an investigation launched the SEC went through every nook and cranny of Buffett's businesses and what they saw alarmed them Buffett and munger's Investments were a complex spiderweb of

ownerships and cross ownerships we had drifted in since we had several companies so the whole thing looked like so much spaghetti that had been done for some evil Master Purpose we didn't feel we done anything improper but there were a lot of rules and and and the the question was whether we violated any [Music] of Stanley sporin was director of enforcement at the SEC anytime you find that things are so wired that they take a long time to be able to understand them that types of activity like that uh raises a suspicion that maybe somebody

is doing that to get away with something what also raised investigators suspicions was that Munger and Buffett were offering Wesco shareholders a higher price for their stock than they could get on the open market so we just kept buying until our lotman ran out at two or three points higher than we had to well that was a very eccentric thing to do but we thought it was the right way to behave and the SEC went berserk you can't manipulate a stock in other words you can't take actions for the sole purpose of causing that stock

price to increase and if you do it violates the law the accusation stung the Westco investigation was really the first time that anyone had ever challenged Warren Buffett's reputation and he responded to it almost as though a rattlesnake were about to bite him because it really threatened his career trying to head off disaster Buffett's lawyer made an unorthodox appeal to Stanley Sporin and saying look as St even though this doesn't look good from your standpoint I want you to take into account the character of the individual in my view meaning workers Houser view he probably

is going to be the number one person in the financial services industry of all time the appeal worked Buffett's company Blue Chip Stamps was fined just over $100,000 but no charges were filed against Buffett so he became even stricter even more proper in his behavior and in worrying about his reputation [Music] in 1973 birkshire Hathaway stock price hit a new high of $93 its profits driven mostly by their insurance businesses Buffett also owns stakes in Banks clothing makers and candy factories but there was one business he was passionate about owning I love newspapers I mean

I started reading newspapers you know my dad would bring them home when it I I don't know whether it was six or seven or eight and was the first thing I'd grab yeah my sisters would grab him too we all like to read it his first newspaper purchase was an Omaha weekly called the sun the sun was a very small business I mean it had never made any money at all Stan lipy was the publisher of Sun newspapers we were a weekly publishing against the daily so we had to uh initiate stories Hopefully investigative pieces

and we'd sit there and brainstorm what we could do at one meeting Buffett suggested doing a story about boy toown a legendary home for Orphan Boys located just outside Omaha and made famous by the 1938 movie with Spencer Tracy and Mickey Rooney 4,000 boys have passed through this city of little men it was sort of common knowledge around Omaha that the money was pouring in there and the number of boys had gone down they'd had a thousand boys at the peak and now I knew the population had gone down so I I I thought there

was a story there Buffett knew that Charities like boy toown had to disclose their net worth in a Federal Form called a 990 so Warren said to us go to Washington and get the boy towns 990 and you'll have a lot more information and that was about the most important piece of information we could lay our hands on that led to the headline which was 700 boys with $29 million and the kicker the overline was Boy toown America's richest city the story won a pullit surprise in 1973 a rare honor for a local weekly newspaper

there was a phone call from St Lipsy and he said we want the polisher on this it was a big day Buffett now had a taste of the big leagues and he wanted more he set his sights high on the influential Washington Post they had a virtual monopoly there was one Competitor that was going to go out of business soon in Washington DC it's a town hooked on news so U what more could you ask for and in addition to that it was the paper that he had an association with as a as a teenager

carrying delivering the paper at first Buffett wasn't sure how much he wanted to invest then the Washington Post broke the Watergate story and President Nixon inadvertently made his decision easier 1973 the stock had gone down a lot partly in response resp to the fact that that the Nixon administration had sort of declared war on the Washington Post problem this play the stock fell from eventually fell I think from 38 to like 15 or so and we bought a lot of stock in a very short period of time I mean people were barreling out of the

stock big institutional investors and the interesting thing is is when we were buying that stock at $20 a share if you'd ask the people who were selling it to us how much the company was actually worth the businesses they would have said a $100 a share but they sold it anyway I salute the Nixon Administration for for stirring up the dust at that time Buffett's rule had always been to keep his distance from his company's managers and Executives but that was not the case at the Washington Post where publisher kathern Graham became his social partner

and Confidant what kathern Graham offers to Warren Buffett is a seat at the larger table suddenly uh you know he's At dinners with Henry Kissinger and suddenly he's not just an investor from Omaha you know he's a part of the scene in in in Washington he's meeting Ben Bradley uh the president of the United States this was not his world and kathern Graham was really his entree into that world she was in a business that fascinated me so she would invite me to these various Washington parties which were were interesting I I mean I I

saw parts of the world that I wouldn't have seen otherwise uh if if if we hadn't become friends but as Buffett's Social Circle widened his wife Susie was feeling increasingly isolated back home and made a bold decision unusual for a Midwestern Housewife of that era she was not divorcing Warren but she left Omaha for San Francisco to pursue a new life and a new career as a singer I get why she moved my dad was getting more famous and my mother was so not the Mrs Warren Buffett at all you are in a fishbowl and

everybody wants stuff from you and it's just it's it's a it's not so much fun really their relationship never changed at all they were completely in love with each other they talked five six seven eight times a day they traveled together um she just couldn't live here to make sure that Warren was taken care of in her absence Susie turned to her friend ostd Ms Susie knew what a solid warm person ostd was and she sort of asked Ostd to look out for worn and that's how they got to know each other within a few

months ostd moved in it's very unorthodox a lot of people I'm sure talked about it and had all kinds of lovely things to say about how weird it was but I also think you know what it's nobody's business what goes on in somebody else's relationship it worked for the three of them it worked Buffett was adjusting to his new domestic Arrangements and his success as an investor in the post sparked a desire for full ownership of a daily Metropolitan paper he looked at a number of them the Buffalo Evening News that was called then became

available at $33 million it was Buffett's largest investment yet the Evening News was one of two Buffalo dailies unlike the competition it didn't have a Sunday addition the competition courier express had a morning paper that was sort of flimsy but they had Sunday which was a hell of a paper and Mo and I both knew that Sunday was only going to get stronger and that you had to have a Sunday paper I knew that we F faced Extinction unless we got into the Sunday newspaper business and so I did that uh within I don't know

six or eight months after we bought the paper and uh at that point all hell broke loose all hell broke loose when Buffett's competition The Courier Express took him to court on an antitrust charge Daniel Mason was a lawyer representing that paper it was very hard we said to justify a $33 Million purchase price uh based upon the revenues that the news had unless the news wound up being a monopoly newspaper a federal judge put a halt to Buffett's Sunday strategy and advertisers began deserting his paper he's losing money hand over fist it almost becomes

you know just a hug sinkhole but Buffett didn't back down we knew that it was not going to be a long-term position to expect two papers to survive in Buffalo eventually one of those papers was going to lose out and the other paper was going to be a hell of a success because their financials would change the fight went on for months until the judge's order was overturned Buffett's competition soon went out of business business and Buffett's paper went on to become hugely profitable you don't make $40 billion by being Mr Rogers or by being

one of the Muppets Warren takes no prisoners he uses every bit of Leverage that he [Music] can in 1985 birkshire Hathaway stock was $2,000 a share Buffett was now a billionaire that same year he made history yet again when he helped finance Capital City's takeover of the American Broadcasting Company it was the biggest media deal ever and one that also led to guest appearances on ABC soap operas oh Warren are you thinking of buying out a Cosmetics company oh ER I never dreamed of going in competition with you oh well that's a relief but home

was still Omaha and Buffett saw himself standing apart from the high flying ways of Wall Street he was famous for sayings like if you want to make a lot of money hold your nose and go to Wall Street and he had a sign in his office that said that Wall Street was about bulls bears and bum steers but in 1987 Buffett decided to invest $700 million and what was then the nation's largest investment house the powerful Solomon Brothers so when he invested in Solomon which was the classic quintessential Wall Street firm people said what is

Warren doing but what always happens with him is if the chance to make money is big enough some of these Concepts sort of get put by the wayside but a few years after Buffett's initial investment Solomon got into big trouble it turned sour when I got a call in August of I guess 1991 they sort of hinted to me about the problems that were coming a Trader named moer had done some very bad things in the government US Government Bond Market those bad things incl uded illegal moves by that Solomon Trader to Corner the bond

market by using unauthorized accounts to increase Solomon's share and force out their competitors Derek mour was a vice Chairman at Solomon Brothers though he had no involvement in the Scandal he was appalled at what was happening to me it was clear that we' broken the law we'd interfered with the workings of a critical market and that the treasur in the FED would be less than amused but the worst was Yet to Come Solomon Executives found out about the deception but delayed in reporting it to the authorities that understandably infuriated the US government the Federal Reserve

the US Treasury everybody when it was found out that they hadn't promptly acted as CEO of Solomon Brothers John goodfriend was taking the blame for the mess I remember it vividly when you make the front page in the right hand column of the New York Times and the picture but you're a fool which I probably was my disrepute became National should have been one of the worst days of my life and probably was I told Tom Strauss and John merwether that we had to go talk on Wall Street that Solomon's top officials were offering to

resign to prevent the firm's possible debarment as a primary dealer in treasury Securities the CEO had Departed the sing and the company of his lawyers we were effectively decapitated in the meantime this highly leverag institution is floating in free space good friend made one last desperate attempt to salvage the company with the only solution he had left a phone call to Omaha Nebraska and he says To Buffett um I'm going to have to resign we need you to come in and be the CEO good friend needed someone who both had the confidence of the government

and in some larger way the confidence of America to say yes this is the Wall Street guy we trust and literally there was only one person in America who could fit that description and that was Warren Buffett and I wasn't involved in the thing so that I was not tainted The Hope was that I would be credible with all the people that were mad at us there were a lot of them when Buffett arrived in New York the company was in a state of panic there's no future and there's no present for an indicted Financial

firm The Firm would have folded I was very clear and I advised Warren of what the consequences would be which not only that the firm would fail rapidly but that there would be uh significant systemic impacts on other institutions Buffett was now helming a company about to go down in disgrace Warren used to say that it takes a lifetime to build a reputation and 5 minutes to lose it and he was afraid that Solomon could be that 5 minutes for him it was August 18 1991 treasury secretary Nicholas Brady had ruled that Solomon was out

of the bond business it was announced at about 10: in the morning on a Sunday the US Treasury had knocked us off the list of really acceptable people primary dealers that would have been uh a death blow to the company so I had to get that changed by the time Tokyo opened he only had a Few hours once the Tokyo markets opened the firm's fate would be sealed the Japanese Banks could have begun a run on the bank by selling our stock by liquidating their positions with us by demanding cash they could very quickly drain

the firm of its capital and its liquidity that momentum would transfer to the London market and by the time New York opened we would have been in acute crisis Buffett called longtime Confidant Charlie Munger into New York for an emergency meeting I will never forget that as long as I live that was the most awesome moment in my life because that would have been a national Calamity and it looked for a long time as though the government was just going to say the hell with you Solomon Warren Buffett spent the entire day in frantic phone

calls to Washington trying to get the feds to back off I was scared stiff and it probably came through in my voice when I was talking I was talking to Nick Brady he was the Secretary of the Treasury and Jerry Corgan who was the head of the Federal Reserve of New York and these people were undeservedly understandably furious with what Solomon had done and and uh uh there were a lot of people that wanted us to go out of business over that weekend and I didn't know what was going to happen at the 11th Hour

there was one final call with Nicholas was Brady there Was a big emotional catch in Warren's voice when he was talking to Nick and I think Nick realized that if he's that disturbed by this maybe he's right that we should back off just a little didn't he didn't have to back off very much just a little bit and uh it prevented the Calamity a visibly Shak and Buffett faced dozens of reporters waiting in the Solomon Auditorium the treasury saw the Solomon Inc board of directors today uh take some major steps to uh install new management

both the company and I personally uh promised treasury that we would uh do everything we could do to uh uh aggressively help them in uh in finding out anything we've done wrong in the past and to make very sure that it doesn't happen in the future and they want that and they need it and they're entitled to it Buffett emerged the hero his reputation more exalted than ever Warren Buffett meeting with the financial Community signing autographs they love him the man with a squeaky clean image who's trying to clean up the mess at Solomon Brothers

I'm going to be the American Bar association's man of the year I mean we are spending a lot of money on on legal face John goodfriend found himself cast as the heavy you need a villain somebody who let all these people astray and did all kinds of bad things but I didn't see how I could fight it I couldn't put Solomon at risk Warren and Charlie were not our advocates in the Situation they maintained their purity and we were down in the thumps life but Warren's work wasn't over to seal the deal he had to

personally take charge of cleaning up at Solomon Brothers it was miserable I was there 9 months in 4 days and it's not an accident that I can tell you 20 years later exactly how long it was there but but it was important that it get done I wouldn't wish it on anybody and I wouldn't wish what happened to The Firm you on on anybody but in a sense I learned a [Music] lot in 1993 birkshire Hathaway stock hit $177,000 a share and Buffett was world famous but no one amount of global traveling could change some

of Buffett's ingrained habits let's talk about Warren's diet um here are the vegetables he'll eat corn on the cob french fries hash browns and the fruit would be uh banana cream pie Strawberry Shortcake I think that's the end of the fruit he also drinks you know several Cherry Cokes a day I've never in my life and I'm not kidding seen the man drink a sip of water ever when he went to China he took a pile of coupons from McDonald's with him and that he's in China for however Long it was and he ate McDonald's

hamburgers the 1990s and 2000s would be the era of birkshire Hathway's greatest expansion brought into the corporate fold was the nation's biggest Furniture Store a leading mobile home manufacturer Fruit of the Loom underwear Benjamin Moore paints Dairy Queen Geico Insurance over 70 companies in all with a combined 250,000 employees if you look at the Assembly of businesses that uh Burkshire represents it's businesses that have been handpicked by Warren Buffett into his holding company that's reaching a level of recognition that many people in America never get to he loves to use the expression that it's his

canvas and he you know like Picasso he wants to paint to work on that canvas as long as he is able you know that's what it's all about for him two of Buffett's new Investments made Headlines by flying in the face of conventional Market wisdom he bought his hometown newspaper the Omaha World Herald and he bought the Burlington Northern Railroad suddenly Warren Buffett invested in it and wow railroads were the hot thing because they had all these virtues that somehow nobody recognized that is the thing that Warren Buffett has done over and over is he

invests in something and then everybody looks at it and says I saw it there why didn't I recognize these things all along in Omaha Burkshire Hathaways annual meeting has become a place of Pilgrimage for tens of thousands of shareholders it's really an amazing thing the stadium is filled and the spotlights are on a small folding table with two 80-year-olds at that table and those 2 80-year-olds have more stamina than anyone else in the room hi they're dying to see Warren Buffet and hear what he has to say his favorite thing I think that happens every

year is a shareholders meeting and he gets energized from it he goes non-stop from Friday to Sunday night and and as the weekend goes on he gets more energy can't explain it it's got to be those burgers in the 2000s Buffett was worth tens of billions of dollars money he planned on giving away to a foundation to be run by his wife Susie but in 2004 Susie died of a stroke following cancer surgery it was a huge shock for all of us my dad I can't I can't explain how much he loved her and how

much he relied on her I am going to start crying talking about this um it you know he'll never totally get over it none of us probably will but she was was really something very special we had always sort of talked about things and planned things assuming he would die first so when she died it was it really was big two years after his wife Susie's death Buffett married ostd Ms in a Private ceremony and he announced that he was pledging the bulk of his fortune not to his children but to the foundation run by

Bill and Melinda Gates Bill Gates has been one of Buffett's closest friends since the early 1990s so it was you know kind of phenomenal it made us step up our ambition level uh add a lot of things we wouldn't have been able to do and uh so now every year it's a gigantic gift that allows us to be double what we would have been without it they're young they're energetic they work much harder at it than I would I get to keep doing what I love doing you know and and they're going to achieve the

same things much better than I would it's a perfect solution for me to get somebody else to do the work I've always been good at that but as his 80th birthday approached an international crisis would open yet another new chapter in Buffett's life absolutely stunning morning on Wall Street Leman Brothers filing for bankruptcy in 2007 a single share of birkshire Hathaway stock hit an all-time high of $150,000 people call this work but the next year the entire US economy was in crisis mode the Dow closed Monday session down more than 500 points with many of

its financial institutions collapsing under mountains of debt The Dominoes started falling and they were huge dominoes they started falling at a pace that was breathtaking The terrified Bankers in New York needed emergency help from anyone that was still solvent and it wasn't just money they needed Warren Buffett is one enormous Good Housekeeping seal of approval and if he's putting money into a situation they're going to assume that he's intelligent enough to be making that investment because he thinks he's going to generate a satisfactory return off of it and that will calm people's fears uh when

fear is at its highest among the businesses that received lifelines from Warren Buffett were Goldman Sachs GE and later Bank of America if you have uh you know Warren Buffett giving you that impr premature saying I have faith in the company you know the market will will recover and you know eventually did in 2011 Warren Buffett was awarded the presidential medal of freedom he's demonstrated that Integrity isn't just a good trait it is good for business but who will succeed this financial icon at the head of Burkshire Hathaway in 2011 the man seen as Buffett's

air apparent was caught in a scandal highlevel executive David so was buying stock for himself in a company called Luol while pitching Luol as a Burkshire acquisition he should have disclosed it to me initially and then he then I would have had him sell it or do something of the sort or we wouldn't have bought the company I mean that it it just was not something that that should have been held back David Soo left the company and that crisis ended in 2012 Buffett announced that he was being treated treated for prostate Cancer and that

he's identified his successor at birkshire but that name has not yet been made public what he has made public are the political and economic causes that he feels passionate about I think in the last couple years he has seen some places where he thinks if I open my mouth it might make a difference what he's most vocal about is what he sees as the inequities of the tax system something that's come to be known as the Buffett Rule there's all kinds of ultra Rich who pay normal taxes but there are there's a small segment but

you can find them very easily who pay very low taxes including me he considers himself you know lucky to have been born in America at this time in history Buffett is just a unique character who came along in a period when America became fascinated with Finance who did it better than anybody you he's been able to bring Wall Street back to Main Street in a way that I don't think we'll ever see again I think he's one of the most memorable people I've ever met uh he's touched a lot of lives with what he's done

and everybody that he's dealt with has made money doing it and has improved their life there are really no people like Warren where you know we should sit back and and and benefit from the deep thinking he's done about business uh since he was very young I think it's all about I'm the world's greatest investor and I've Got $40 billion to prove the point I just have a great time every day I mean I I am getting to do exactly what I want to do in life you know it doesn't get any better than that

[Music] [Music] he's been called The Oracle of Omaha the sage of Nebraska and from a young age he knew he would be rich I could figure out when I was 10 if I had a fairly long life I was going to end up with a lot of money he was right 70 years later he was the richest man in the world a tycoon with a rockstar Aura I've never known anyone as focused as he is it's amazing he wants to be the best he can be at what he's doing and what he's doing happens to

make a lot of money Warren's very young and energetic Warren is super interested in the latest things going on and there's so much that you just absorb from Warren's approach to things but among all those winning bets there have also been dramatic brushes with financial disaster both the company and I personally promised treasury that we would aggressively help them in finding out anything we've done wrong in the past and to make very sure that it doesn't happen in the future I was scared I was scared stiff there were a lot of people that wanted us

to go out of business over that weekend and I didn't know what was going to happen and Behind his folksy demeanor there's one of America's shrewdest and toughest businessmen you don't make $40 billion by being Mr Rogers or by being one of the Muppets Warren takes no prisoners when it comes to a negotiation he uses every bit of Leverage that he can [Music] this is going to be one of those days that lingers in the mind the Dow was down two or 300 nobody knows what's in these bundles a category 5 test of our financial

it was a terrifying moment in US Financial history in 2008 some of wall Street's biggest banks and investment firms were about to fail threatening to take much of the world's economy down with them inside the Citadel of money and power desperate calls for help went out to the same person as dramatized in this HBO TV movie we're thinking of reaching out to Warren Buffett great you and Buffett go back right do me a favor and call him tell him even this Rock Solid during the days that the financial crisis was unfolding he was viewed as

the go-to person if you you're in trouble Warren Buffett can save you for most of his life Buffett avoided the Wall Street ways of risky speculation in fact he stayed far away from Wall Street Itself Warren really is a product of Omaha especially in the era that he grew up there the virtues of modesty Thrift plain spokenness and Warren really exemplifies those Warren Buffett still lives and works just a short distance from where he was born in 1930 and it was here in Omaha that he began his obsession with all things Financial it hit me

right away it was like kids that like to play the piano early or something of the sort I always like numbers I I knew I was going to be interested in stocks the rest of my life but probably at the time I was you know eight or nine I used to keep charts on all kinds of stocks when I was uh that age my aunt gave me a a World Almanac so I'm I memorized the population well cities of any real size but I just like numbers it it was it was not limited to business

numbers at all Buffett also had The Uncanny ability to remember all those numbers and how they fit into the big picture a skill that would be the Bedrock of his later success former Wall Street analyst Alice Schroeder is the author of The Snowball Buffett's authorized life story Warren grew up in the Great Depression the family did not have have money at all because his father had lost his job as a stock broker and so around the dinner table money was what they talked about but Buffett wanted to do more than talk my grandfather had a

grocery store and I used to buy Coca-Cola from him in six packs for a quarter and sell them BR nickel each I sold the Saturday evening Post door too I sold Ladies Home Journal I had all kinds of little Ventures not all not all usually successful I might add I like doing business early on journalist Roger Lowenstein wrote an early biography of Warren Buffett then he gets into more exotic things he collects golf ball he gets other kids in the block to do that with him they they collect golf balls and resell them he's picking

up stubs at the racetrack when he's 10 11 12 cuz some of them haven't been used yet he grows up knowing he wants to make money you know investing in business comes later but it's in him Buffett made enough from these Ventures to do what until then he had only dreamed of doing playing the stock market first stock I bought was cityy service preferred was a stock that had passed the dividend for how many years 20 years or something like that and so it had large accumulated dividends and it was selling a 38 and a

quarter and I bought three shares I went all in that was all the that was my entire net worth at the same time Buffett's stock broker father Howard Buffett had won a seat in Congress as a Conservative Republican and in 1943 he took the family to Washington it was a chance for Warren to start a new business delivering papers for the Washington Post well I started with a couple of routes because I was good about delivering papers on time so then they gave me these absolutely Prime routes got up to where I was making probably

$150 a month or something which was a lot of money and that and I was making it all before I went to school in the morning in the morning so it was good savings from those paper Roots became the seed money for his later Empire I'd made $99,800 and I I made most of that delivering papers I delivered about 500,000 papers and I made about a penny a piece so I made about $5,000 for the delivery of papers After High School he was ready to go full-time as a businessman and investor but his father convinced

the 16-year-old Buffett to go to college first at the warten school of the University of Pennsylvania he roomed with fellow Nebraskan Charles Peterson he was very immature he wore tennis shoes or if he wore shoes other that he had a hard time having them both be the same color he may have a black and a brown shoe on and never know the difference hair messed up but Buffett was way ahead when it came to academics uh every day after class i' spent so many hours studying warn the contrary uh picked up the the books that

are appable to him and uh sat there and flipped through them Page by Page uh and he might be through two or three courses in a in a couple weeks he had a photographic uh uh mind uh I did not and Buffett had a unique way of spending all those hours he did not have to study at that time he was crazy about El Jose and he'd play those records mamy mamy oh I love you m and mimicking an hour after hour and what other songs and that time is ready to go crazy and when

he wasn't singing Buffett was getting his first taste of political activism I was president of the young Republicans Club at the University of Pennsylvania and then I even ran for delegate to the National Convention one time as a republican after breezing through college Buffett went to interview for Harvard Business School I was 19 at the time and the fellow spent about 10 minutes with me and he said he said you better come back again later it was very clear I'd flung the interview [Music] after being rejected by Harvard Buffett set his sights on Colombia's business

school where Wall Street Maverick Benjamin Graham was a professor Graham's investment philosophy was simple but it defied conventional Wall Street wisdom many people take their cues as to what to do from what the market itself is doing but Graham would would tell you that the market is is there to serve you not to inform you and basically he was saying the market will be wrong now that flies in the face of what a lot of other people think but Graham would say that sometimes the market is very very wrong and if you look at the

prices of stocks as buying pieces of businesses you will be able to recognize when the market is very wrong Graham's way was to find undervalued stocks that were off the radar and Buffett became his most devoted disciple he taught us to find a dollar bill that was going to be you Could buy for 50 cents but the dollar Bill wouldn't necessarily increase in value very fast and I analogize that too essentially walking down the street looking for cigar cigar butts with one puff left in them and they weren't very attractive and and there was maybe

only one puff in them but they didn't cost anything armed with the gram philosophy Buffett headed back to Omaha to start his own business he said I'm going to form a partnership and he said do what you want in I said sure I do there was only seven or eight people in that original partnership convincing people beyond the first seven investors got rockier my sales pitch wasn't very effective I was I was 20 years old I looked like I was about 16 and I probably behaved like I was about 12 so I would go around

and call on people they were always nice to me but I would see a Mr Smith and and uh I would go through all these facts and figures about why you should buy some stock and when I got all through in my head I would count to three I would go one two three and then Mr Smith would say what does your dad think and I'd always want to hit him but it was frustrating Buffett knew that he had to be a better salesman so he turned to popular self-help Guru Dale Carnegie well I I

I had to be able to communicate with people better and and I mean in groups particularly I just knew that I couldn't go through life terrified of public speaking and I I'd heard about the Dale carneg of course and he applied those lessons when he began dating Hometown girl Susan Thompson I mean I proposed to my wife during during the Dale Carnegie course so I mean I got my money's worth Right off right during the course I had the intellect to succeed but I didn't I I did not have the Persona I was not put

together as a person until I met her Buffett was finally ready to put his career in gear he was picking stocks that others were ignoring and his stocks kept going up little by little words spread around Omaha that the kid knew what he was doing he's Dev Ving every annual report and they stay devoured he remembers them and you know he's got these balance sheets in his mind so that if a stock gets cheap you know 3 years later he remembers what the fundamentals of the company are this is a buy now in the first

5 years that Buffett was in business the Dow Rose by 74% while Buffett's Investments had gone up 250% in 1961 at the age of 30 he reached millionaire status friends like Stan lipy saw that he was still operating as a one-man band his study was right off the bedroom in their house he wasn't even in a office building at that point and they had three kids and people joke about Warren not knowing his kids and that's of course a great exaggeration but the fact of the matter Susie stabilized the family so that Warren could do

the studying that he needed his wealth was growing rapidly but you couldn't tell that from the way the family lived their home which Buffett still lives in was bought over 50 years ago for $32,000 his children all went to Public Schools Susie Buffett is the eldest of three Buffett children we grew up in a way that uh I think it's probably different than most kids if you've got a dad who has what my dad has I mean we didn't get cars when we turned 16 we didn't we didn't live any differently really than most of

the other kids we knew the biggest change in the Buffett household was that Warren was moving away from the staunch republicanism of his father civil rights had the biggest effect on changing my my views on politics neither party necessarily covered themselves with glory on it but it was clear to me that a basic change a really basic change in Civil Rights was called for and the Democrats seemed to be much more attuned to that than the Republicans and Buffett was about to make an even bigger change in his professional life in his 30s Buffett wanted

more than just being a stock picker he wanted to find companies that he could buy a controlling interest in and he found one 100 miles away in beatric Nebraska themer was a a company that was really not doing very well it was in the windmill business windmills now have come back but it was not a good business to be in 50 years ago but the stock was selling very cheap so I started I started buying stock in that it was a business that that had built up a lot of inventory that it didn't need and

it had a labor force that was too big so it was a company that just needed to be downsized and of course the town that it was in was very small and it was the main employer a hundred people lost their jobs and Buffett took the heat what it taught Warren Buffett was that he did not want to get involved anymore in businesses that had labor problems Where he would have to fire people where he would have to get involved personally in the management he wanted somebody else to do that it became another guiding principle

of Buffett's evolving master plan buy businesses whose management you trust enough to leave in place Buffett's next big investment also looked like a potential failure it was a textile mill called Berkshire Hathaway whose stock was selling for $7.50 a share we bought a textile company that was destined eventually to go out of business just like every other New England textile company did it was a mistake Glen Tong is a managing partner for T2 Partners Berkshire hathway was not a good business they didn't have a competitive advantage that allowed them to earn a sufficient return on

the capital invested in the business so while they were profitable to some extent that profitability was inexorably being squeezed when the cash was extracted out of Berkshire hathway it was reinvested first major reinvestment that was enormously profitable was the insurance business and that drove everything that Berkshire hathway did from then on Andrew fry is a reporter for Bloomberg News so I moved the company basically from textiles to insurance and part of the reason was because the industry itself generated profits but also because through the premiums that they gathered up from their policy holders buffet was

able to take that and make his stock Investments it's called the float money comes in interest free from insurance premiums which then gets invested in other businesses And while the textile mill eventually died he kept the name birkshire Hathaway which would live on as the name of his soon to be multi-billion dollar company rather than try and rename it every few years based on what I just bought uh why not just stick with the original people uh people know what Berkshire outway is about it says so much about him about Buffett that he sticks with

Burkshire hathway anyone else they would have gone to you know BH Diversified resources uh he likes it he likes the history of the company he's not a changeling Buffett was now on a roll buying Bargains like se's candies and Blue Chip Stamps a popular Shoppers loyalty program of that era like the insurance business it delivered interest free cash that could be used for future Investments I think I have just enough books it's quite a business and he'd found a professional partner who was as Market Savvy as he was Charlie Munger who was working as a

lawyer when the two first met well Charlie Munger actually grew up a half a block from where I live he worked at my grandfather's grocery store as did I but he was six years older and I never knew him at all in Omaha and then through a mutual friend uh we got introduced in about 10 minutes I knew this guy and I were going to do a lot of things together over the years when I met Warren he immediately started telling me how much better his way of making a living was than mine and that

I was too smart to stay in such a silly business as law practice when I could go into his business of running an investment partnership and it took me About two or three years to to uh realize he was right in the late 1960s Wall Street was in the midst of an unprecedented boom stock prices were soaring as everyone rushed into the stock market but for Buffett it was time to get out I was running little over hundred million dollars and had a lot of happy partners and I wrote him a letter and I said

you know I don't know how to play in this game anymore the valuations have gotten uh to where I can't find things I terminated my partnership in 1969 it seems counterintuitive but Warren has always quoted Gus Levy who said be greedy when others are fearful be fearful when others are greedy and Warren knew that the party would come to an end and that some point the bubble would burst Buffett was 40 years old and was worth more than $25 million but without the Partnerships to oversee he started getting restless and in 1973 made a fateful

decision to buy into a California Bank called Wesco the problem was Wesco was in the middle of a merger deal with another company and the next thing you know the company that was going to buy Westco complained to the Securities and Exchange Commission that Warren was trying to bust up their merger which would have been illegal and so an investigation launched the SEC went through every nook and cranny of Buffett's businesses and what they saw alarmed them Buffett and munger's Investments were a complex spiderweb of ownerships and cross ownerships we had drifted in since we

had several companies so the whole thing looked like so much spaghetti that had been done for some evil Master purpose we didn't feel we done anything improper but there were a lot of rules and and and the question was whether we' violated any [Music] of Stanley sporin was director of enforcement at the SEC anytime you find that things are so wired that they take a long time to be able to understand them that types of activity like that uh raises a suspicion that maybe somebody is doing that to get away with something what also raised

investigators suspicions was that Munger and Buffett were offering Wesco shareholders a higher price for their stock than they could get on the open market so we just kept buying until our allotment ran out at two or three points higher than we had to well that was a very eccentric thing to do but we thought it was the right way to behave and the SEC went berserk you can't manipulate a stock in other words you can't take actions for the sole purpose of causing that stock price to increase and if you do it violates the law

the accusations stung the Westco investigation was really the first time that anyone had ever challenged Warren Buffett's reputation and he responded to it almost as though a rattlesnake were about to bite him because it really threatened his career trying to head off disaster Buffett's lawyer made an unorthodox appeal to Stanley sporin and saying look Stan even though this doesn't look good from your standpoint I want you to take into account the character of the individual my view meaning workers Houser view he probably is going to be the number one person in the financial services industry

of all time the appeal worked Buffett's company Blue Chip Stamps was fined just over $100,000 but no charges were filed against Buffett so he became even stricter even more proper in his behavior and in worrying about his reputation [Music] in 1973 birkshire Hathaway stock price hit a new high of $93 its profits driven mostly by their insurance businesses Buffett also owned stakes in Banks clothing makers and candy factories but there was one business he was passionate about owning I love newspapers I mean I started reading newspapers you know my dad would bring them home when

it I don't know whether it was six or seven or eight and it was the first thing I'd grab my sisters would grab him too we all like to read his first newspaper purchase was An Omaha weekly called the sun the sun was a very small business I mean it had never made any money at all Stan lipy was the publisher of Sun newspapers we were a weekly publishing against a daily so we had to uh initiate stories hopefully investigative pieces and we'd sit there and brainstorm what we could do and at one meeting Buffett

suggested doing a story about boy toown a legendary home for Orphan Boys located just outside Omaha and made famous by the 1938 movie with Spencer Tracy and Mickey Rooney 4,000 boys have passed through this city of little men it was sort of common knowledge around Omaha that the money was pouring in there and the number of boys had gone down they'd had a thousand boys at the peak and now I knew the population had gone down so I I I thought there was a story there Buffett knew that Charities like boy toown had to disclose

their net worth in a Federal Form called a 990 so Warren said to us go to Washington and get the boy towns 990 and you'll have a lot more information and that was about the most important piece of information we could lay our hands on that led to the headline which was 700 boys with $29 million and the kick the overline was Boy toown America's richest city the story won a pullit Sur prize in 1973 a rare honor for a local weekly newspaper there was a phone call from St lipy and he said we want

the polisher on This it was a big day Buffett now had a taste of the big leagues and he wanted more he set his sights high on the influential Washington Post they had a virtual Monopoly there was one competitor that was going to go out of business soon in Washington DC it's a town hooked on news so U what more could you asked for and in addition to that it was the paper that he had an association with as a as a teenager carrying delivering the paper at first Buffett wasn't sure how much he wanted

to invest then the Washington Post broke the Watergate story and President Nixon inadvertently made his decision easier 1973 the stock had gone down a lot partly in response to the fact that that the Nixon administration had sort of declared war on the Washington Post the problem this the game has to be played rough the stock fell from eventually fell I think from 38 to like 15 or so and we bought a lot of stock in a very short period of time I mean people were barreling out of the stock big institutional investors and the interesting

thing is is when we were buying that stock at $20 a share if you'd asked the people who were selling it to us how much the company was actually worth the businesses they would have said $100 a share but they sold it anyway I salute the Nixon Administration for for stirring up the dust at that time Buffett's rule had always been to keep his distance from his company's managers and Executives but that was not the case at The Washington Post where publisher Katherine Graham became his social partner and Confidant what Katherine Graham offers to warrn

Buffett is a seat at the larger table suddenly uh you know he's at dinners with Henry Kissinger and suddenly he's not just an investor from Omaha you know he's a part of the scene in in in Washington he's meeting Ben Bradley the president the United States this was not his world and Katherine Graham was really his entree into that world she was in a business that fascinated me so she would invite me to these various Washington parties which were were interesting I I mean I I saw parts of the world that I would have seen

otherwise uh if if we hadn't become friends but as Buffett's Social Circle widened his wife Susie was feeling increasingly isolated back home and made a bold decision unusual for a Midwestern Housewife of that era she was not divorcing Warren but she left Omaha for San Francisco to pursue a new life and a new career as a singer I get why she moved my dad was getting more famous and early biography of Warren Buffett then he gets into more exotic things he collects golf ball he gets other kids in the block to do that with him

they they collect golf balls and resell them he's picking up stubs at the racetrack when he's 10 11 12 cuz some of them haven't been used yet he grows up knowing he wants to make money you know investing in business comes later but it's in him Buffett made enough from these Ventures to do what until then he had only dreamed of doing playing the stock market first stock I bought was City Service preferred it was a stock that had passed the dividend for how many years 20 years or something like that and so it had

large accumulated dividends and it was selling at 38 and a quarter and I bought three shares I went all in that was all the that was my entire net worth at the same time Buffett's stock broker father Howard Buffett had won a seat in Congress as a Conservative Republican and in 1943 he took the family to Washington it was a chance for Warren to start a new business delivering papers for the Washington Post well I started with a couple of routes because I was good about delivering papers on time so then they gave me these

absolutely Prime routes got up the where I was making probably $150 a month or something which was a lot of money and that and I was making it all before I went to school in the morning in the morning so it was good savings from those paper Roots became the seed money for his later Empire I'd made $99,800 and I I made most of that delivering papers I delivered about 500,000 papers and I made about a penny a piece so I made about $5,000 for the delivery of papers After High School he was ready to

go full-time as a businessman and investor but his father convinced the 16-year-old Buffett to go to college first at the warden School of the University of Pennsylvania he roomed with fellow Nebraskan Charles Peterson he was very immature he wore tennis shoes or if he wore shoes other than that he had a hard time having them both be the same color he may have a black and a brown shoe on and never know the Difference hair messed up but Buffett was way ahead when it came to academics uh every day after class I'd spent so many

hours studying War the contrary uh picked up the the books that are appable to him and uh sat there and flipped through them Page by pige uh and he might be through two or three courses in a in a couple weeks he had a photographic uh uh mind uh I did not and Buffett had a unique way of spending all those hours he did not have to study at that time he was crazy about El Jose and he'd play those records M mamy how I love you mamy and mimicking an hour after hour and what

other songs and that time was ready to go crazy and when he wasn't singing Buffett was getting his first taste of political ACC AC ISM I was president of the young Republicans Club at the University of Pennsylvania and then I even ran for delegate to the National Convention one time as a republican after breezing through college Buffett went to interview for Harvard Business School I was 19 at the time and the fellow spent about 10 minutes with me and he said you he said you better come back again later it was very clear I'd flung

the interview [Music] after being rejected by Harvard Buffett set his sights on Colombia's business school where Wall Street Maverick Benjamin Graham was a professor Graham's investment philosophy was simple but it defied conventional Wall Street wisdom many people take their cues as to what to do from what the market itself is doing but Graham would would tell you that the market is is there to serve you not to inform you and basically he was saying the market will be wrong now that flies in the face of what a lot of other people think but Graham would

say that sometimes the market is very very wrong and if you look at the prices of stocks as buying pieces of businesses you will be able to recognize when the market is very wrong Graham's way was to find undervalued stocks that were off the radar and Buffett became his most devoted disciple he taught us to find a dollar bill that was going to be you could buy for 50 cents but the dollar bill wouldn't necessarily increase in value very fast and I analogize that too essentially walking down the street looking for cigar cigar butts with

one puff left in them and they weren't very attractive and and there was maybe only one puff in them but they didn't cost anything armed with the gram philosophy Buffett headed back to Omaha to start his own business he said I'm going to form a partnership and he said would do you want in I said sure I do there was only seven or eight people in that original partnership convincing people beyond the first seven investors got rockier my sales pitch wasn't very effective I was I was 20 years old I looked like I was about

16 and I probably behaved like I was about 12 so I would go around and call on People they were always nice to me but I would see him Mr Smith and and uh I would go through all these facts and figures about why you should buy some stock and when I got all through in my head I would count to three I would go one two three and then Mr Smith would say what does your dad think and I'd always want to hit him but it was frustrating Buffett knew that he had to be

a better salesman so he turned to popular self-help Guru Dale Carnegie well I I I had to be able to communicate with people better and I mean in groups particularly I just knew that I couldn't go through life terrified of public speaking and I I'd heard about the Dale Carnegie of course and he applied those lessons when he began dating Hometown girl Susan Thompson I mean I proposed to my wife during during the Dale Carnegie course so I mean I got my money's worth right off right during the course I had the intellect to succeed

but I didn't I I did not have the Persona I was not put together as a person until I met her Buffett was finally ready to put his career in gear he was picking stocks that others were ignoring and his stocks kept going up little by little words spread around Omaha that the kid knew what he was doing he is devouring every annual report and they stay devoured he remembers them and you know he's got these balance sheets in his mind so that if a stock gets cheap you know 3 years later he remembers what

the fundamentals of the company are this is a buy now in the first five years that Buffett was in Business the Dow Rose by 74% while Buffett's Investments had gone up 250% in 1961 at the age of 30 he reached millionaire status friends like Stan lipy saw that he was still operating as a one-man band his study was right off the bedroom in their house he wasn't even in a office building at that point and they had three kids and people joke about Warren not knowing his kids and that's of course a great exaggeration but

the fact of the matter Susie stabilized the family so that Warren could do the studying that he needed his wealth was growing rapidly but you couldn't tell that from the way the family lived their home which Buffett still lives in was bought over 50 years ago for $32,000 his children all went to Public Schools Susie Buffett is the eldest of three Buffett children we grew up in a way that uh I think is probably different than most kids if you've got a dad who has what my dad has I mean we didn't get cars when

we turned 16 we didn't we didn't live any differently really than most of the other kids we knew the biggest change in the Buffett household was that Warren was moving away from the staunch republicanism of his father civil rights had the biggest effect on changing my my views on politics neither party necessarily covered themselves with glory on it but it was clear to me that a basic change a really basic change in Civil Rights was called for and the Democrats seemed to be much more attuned to that than the Republicans and Buffett was about to

make an even bigger change in his professional life in his 30s Buffett wanted more than just being a stock picker he wanted to find companies that he could buy a controlling interest in and he found one a 100 miles away in beatric Nebraska them Mr Mill was a a company that was really not doing very well it was in the windmill business of windmills now have come back always quoted Gus leevy who said be greedy when others are fearful be fearful when others are greedy and Warren knew that the party would come to an end

and that some point the bubble would burst Buffett was 40 years old and was worth more than $25 million but without the Partnerships to oversee he started getting restless and in 1973 made a fateful decision to buy into a California Bank called Wesco the problem was Wesco was in the middle of a merger deal with another company and the next thing you know the company that was going to buy Wesco complained to the Securities and Exchange Commission that Warren was trying to bust up their merger which would have been illegal and so an investigation launched

the SEC went through every nook and cranny of Buffett's businesses and what they saw alarmed them Buffett and munger's Investments were a complex spiderweb of ownerships and cross ownerships we had drifted in since we had several companies so the whole thing looked like so much spaghetti that had been done for some evil Master Purpose we didn't feel we done anything improper but there were a lot of rules and and and the question was whether it violated [Music] any Stanley sporin was director of enforcement at the SEC anytime you find that things are so wired that

they take a long time to be able to understand them that types of activity like that uh raises a suspicion that maybe somebody is doing that to get away with something what also raised investigators suspicions was that Munger and Buffett were offering Wesco shareholders a higher price for their stock than they could get on the open market so we just kept buying until our allotment ran out at two or three points higher than we had to well that was a very eccentric thing to do but we thought it was the right way to behave and

the SEC went berser you can't manipulate a stock in other words you can't take actions from the sole purpose of causing that stock price to increase and if you do it violates the law the accusations stung the Westco investigation was really the first time that anyone had ever challenged Warren Buffett's reputation and he responded to it almost as though a rattlesnake were about to bite him because it really threatened his career trying to head off disaster Buffett's lawyer made an unorthodox appeal to Stanley Sporin and saying look Stan even though uh this doesn't look good

from your standpoint I want you to take into account the character of the individual my view meaning workers House of view he probably is going to be the number one person in the financial services industry of all time the appeal worked Buffett's company Blue Chip Stamps was fined just over $100,000 but no charges were filed against Buffett so he became even stricter even more proper in his behavior and in worrying about his [Music] reputation in 1973 birkshire Hathaway stock price hit a new high of $93 its profits driven mostly by their insurance businesses Buffett also

owns stakes in Banks clothing makers and candy factories but there was one business he was passionate about owning I love newspapers I mean I started reading newspapers you know my dad would bring them home when I I don't know whether it was six or seven or eight and it was the first thing I'd grab my sisters would grab him too we all like to read his first newspaper purchase was an Omaha weekly called the sun the sun was a very small business I mean it had never made any money at all Stan lipy was the

publisher of Sun newspapers we were a weekly publishing against the daily so we had to uh initiate stories Hopefully investigative pieces and we'd sit there and brainstorm what we could do at one meeting Buffett suggested doing a story about boy toown a legendary home for Orphan Boys located just outside Omaha and made famous by the 1938 movie with Spencer Tracy and Mickey Rooney 4 he's been called The Oracle of Omaha the sage of Nebraska and from a young age he knew he would be rich I could figure out when I was 10 if I had

a fairly long life I was going to end up with a lot of M he was right 70 years later he was the richest man in the world a tycoon with a rockar aura I've never known anyone as focused as he is it's amazing he wants to be the best he can be at what he's doing and what he's doing happens to make a lot of money Warren's very young and energetic Warren is super interested in the latest things going on and there's so much that you just absorb from Warren's approach to things but among

all those winning bets there have also been dramatic brushes with financial disaster both the company and I personally promised treasury that we would aggressively help them in finding out anything we've done wrong in the past and to make very sure that it doesn't happen in the future I was scared I was scared stiff there were a lot of people that wanted us to go out of business over that weekend and I didn't know what was going to happen and behind his folksy demeanor there's one of America's shrewdest and toughest businessmen you you don't make $40

Billion by being Mr Rogers or by being one of the Muppets Warren takes no prisoners when it comes to a negotiation he uses every bit of Leverage that he [Music] can this is going to be one of those days that lingers in the mindway the Dow was down 2 or 300 nobody knows what's in these bundles a category 5 test of our financial L it was a terrifying moment in US Financial history in 2008 some of wall Street's biggest banks and investment firms were about to fail threatening to take much of the world's economy down

with them inside the Citadel of money and power desperate calls for help went out to the same person as dramatized in this HBO TV movie we're thinking of reaching out to Warren buff Great you and Buffett go back right do me a favor and call him tell him leave him this Rock Solid during the days that the financial crisis was unfolding he was viewed as the go-to person if you're in trouble Warren Buffett can save you for most of his life Buffett avoided the Wall Street ways of risky speculation in fact he stayed far away

from Wall Street itself Warren really is a product of Omaha especially in the era that he grew up there the virtues of modesty Thrift plain spokenness and Warren really exemplifies those Warren Buffett still lives and Works just a short distance from where he was born in 1930 and it was here in Omaha that he began his obsession with all things Financial it hit me right away it was like kids that like to play the piano early or something of the sort I always like numbers I I knew I was going to be interested in stocks

the rest of my life but probably at the time I was you know eight or nine I used to keep charts on all kinds of stocks when I was uh that age my aunt gave me a a wh Almanac so I'm I memorized the population of all cities of any real size but I I just like numbers it it was it was not limited to business numbers at all Buffett also had The Uncanny ability to remember all those numbers and how they fit into the big picture a skill that would be the Bedrock of his

later success former Wall Street analyst Alice Schroeder is the author of The Snowball Buffett's authorized life story War grew up in the Great Depression the family did not have money at all because his father had lost his job as a stock broker and so around the dinner table money was what they talked about but Buffett wanted to do more than talk my grandfather had a grocery store and I used to buy Coca-Cola from him in six packs for a quarter and sell them for a nickel each I sold the Saturday evening post door too I

sold Ladies Home Journal I had all kinds of little Ventures not all not all hugely successful I might add I like doing business early on journalist Roger Lowenstein wrote but it was not a good business to be in 50 years ago but the stock was selling very cheap so I started I started buying stock in that it was a business that had Built up a lot of inventory that it didn't need and it had a labor force that was too big so it was a company that just needed to be downsized and of course the

town that it was in was very small and it was the main employer a 100 people lost their jobs and Buffett took the heat what it taught Warren Buffett was that he did not want to get involved anymore in businesses that had labor problems where he would have to fire people where he would have to get involved personally in the management he wanted somebody else to do that it became another guiding principle of Buffett's evolving master plan buy businesses whose management you trust enough to leave in place Buffett's next big investment also looked like a

potential failure it was a textile mill called birkshire Hathaway whose stock was selling for $77.50 a share we bought a textile company that was destined eventually to go out of business just like every other New England textile company did it was a mistake Glen tongue is a managing partner for T2 Partners Berkshire half the way was not a good business they didn't have a competitive advantage that allowed them to earn a sufficient return on the capital invested in the business so while they were profitable to some extent that profitability was inexorably being squeezed when the

cash was extracted out of birkshire hathway it was reinvested first major reinvestment that was enormously profitable was the insurance business and that drove everything that Berkshire hathway did from then on Andrew fry is a reporter for Bloomberg News so moved the company basically from textiles to insurance and Part of the reason was because the industry itself generated profits but also because through the premiums that they gathered up from their policy holders buffet was able to take that and make his stock Investments it's called the float money comes in interest free from insurance premiums which then

gets invested in other businesses and while the textile mill eventually died he kept the name birkshire Hathaway which would live on as the the name of his soon toe multi-billion dollar company rather than try and rename it every few years based on what I just bought uh why not just stick with the original people uh people know what Burkshire otherway is about it says so much about him about Buffett that he sticks with Burkshire Hathaway anyone else they would have gone to you know BH Diversified resources um he likes it he likes the history of

the company he's not a changeling Buffett was now on a road role buying Bargains like Seas candies and Blue Chip Stamps a popular Shoppers loyalty program of that era like the insurance business it delivered interest free cash that could be used for future Investments I think I have just enough book it's quite a business and he'd found a professional partner who was as Market Savvy as he was Charlie Munger who was working as a lawyer when the two first met well Charlie mger actually grew up a half a block from where I live he worked

to my grandfather's grocery store as did I but he was 6 years older and I never knew him at all in Omaha and Then through a mutual friend uh we got introduced in about 10 minutes I knew that this guy and I were going to do a lot of things together over the years when I met Warren he immediately started telling me how much better his way of making a living was than mine and that I was too smart to stay in such a silly business as law practice when I could go into his business

of running an investment partnership and it took me about two or three years to to uh realize he was right in the late 1960s Wall Street was in the midst of an unprecedented boom stock prices were soaring as everyone rushed into the stock market but for Buffett it was time to get out I was running little over $100 million and had a lot of happy partners and I wrote him a letter and I said you know I don't know how to play in this game anymore the valuations have gotten uh to where I can't find

things I terminated my partnership in 1969 it seems counterintuitive but Warren has