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All day long Buffett had been thinking about what to say that evening after dinner. He knew that the stock market, which was closed, would plunge as soon as it reopened. He realized that the innocence of the United States had now been shattered, and the government would be grappling with an unseen enemy. He saw his role as to convey his thoughts on what all of this meant.

The guests who attended the dinner that night watched President Bush’s speech on a giant TV screen, then heard Buffett speak about terrorism, contrasting it with conventional war. “Terrorists have a huge advantage. They pick the time, the place, and the means. It’s very difficult to defend against fanatics…. This is just the start of things. We don’t know who our enemy is. Now, it’s us versus a shadow. There could be many shadows.”14

The following morning and over the next few days, as airports gradually began to allow flights to resume on a limited schedule, the Buffetts organized dinners, tennis, and golf for the remaining guests until everyone was able to straggle home from Omaha.15 With the cleanup under way in lower Manhattan, and “Missing” posters going up all over New York City, Buffett considered how he could use his nationally recognized reputation to help the country. The stock market was about to reopen after its longest recess since the Great Depression. He agreed to go on 60 Minutes with former Treasury Secretary Robert Rubin and Jack Welch, the recently retired CEO of General Electric. Americans would recognize him as an expert on investing and the stock market, more than anyone else. On the show that Sunday evening, Buffett said that he would not be selling stocks—he might be a buyer if they declined enough—and explained that he had confidence in the ability of the United States economy to surmount the ripples from the terrorist attack. By now Warren Buffett’s reputation for honesty, built over decades, was known to anyone who cared about the stock market. When he said something, people knew he meant it. At Sun Valley, of course, Buffett had said the value of the market would need to fall by half before he would get really excited. So when he said he might be a buyer if stocks declined enough, the savvy knew he meant it—but they also knew “enough” meant “a hell of a lot.”

The next day, the Dow fell 684 points, or seven percent, its largest point decline ever in a single day. The Federal Reserve began to take action after the market plunged on its reopening, cutting interest rates fifty basis points (half a percent). By the end of the week, the Dow had fallen more than fourteen percent, its largest one-week drop in history. Yet the drop as a percent of investors’ wealth was less than half that of 1987, when the market plunged by one-third. From the time trading opened, sellers concentrated on sectors like insurers and airlines, where the most serious financial consequences would be. People were less panicked than they were groping in the dark to try to make intelligent guesses about the unknowable.

Within days, as barricades and new security gates were installed all over Manhattan amid bomb scares and the Buffett Group trip to Biarritz was canceled, Buffett talked to Berkshire’s insurers and tried to assess the damage to Berkshire Hathaway. The initial estimates, which would later be revised slightly upward, indicated that Berkshire had lost $2.3 billion.16 This was many times its largest loss from any earthquake, hurricane, tornado, or other natural disaster to date. Of the total, $1.7 billion came from General Re.

Buffett had had enough. He went to work writing a special letter that he posted on his Web site, excoriating General Re for having broken the “basic rules of underwriting.” Since he had never, in the history of Berkshire Hathaway, publicly dressed down the management of one of his companies, the effect was to brand General Re with a red-ink scarlet letter, which remained posted on the Web site for all to see. It was now in a precarious