The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [59]
The art of handicapping is based on information. The key was having more information than the other guy—then analyzing it right and using it rationally. Warren had first put this into practical use as a child down at the Ak-Sar-Ben racetrack, when his friend Bob Russell’s mother introduced the boys to the world of pari-mutuel betting.
Warren and Russ were too young to wager, but they quickly figured out how to make a buck. Amid the cigarette butts, beer slops, old programs, and hot-dog remnants in the grime and sawdust of the Ak-Sar-Ben floorboards were thousands of discarded tickets, peeping out like mushrooms on the forest floor. The boys turned themselves into truffle hounds.
“They call that ‘stooping.’ At the start of the racing season you get all these people who’d never seen a race except in the movies. And they’d think that if your horse came in second or third, you didn’t get paid, because all the emphasis is on the winner, so they’d throw away place and show tickets. The other time you would hit it big was when there was a disputed race. That little light would go on that said ‘contested’ or ‘protest.’ By that time, some people had thrown away their tickets. Meanwhile, we were just gobbling them up. We wouldn’t even look at them when we were working. At night we’d go through them. It was awful; people would spit on the floor. But we had great fun. If I found any winning tickets, my aunt Alice, who didn’t care anything at all about races, would cash them in for us, because they wouldn’t cash them for kids.”
Warren wanted to go to the races all the time. When Mrs. Russell wasn’t taking him, “my dad would never go to the races,” says Buffett. “He did not believe in the races.” Instead, his parents let his great-uncle Frank, the oddball of the family, take him. Frank had long ago reconciled with Ernest and had eventually married a woman whom the family referred to as “the gold-digger.”1 He had no particular interest in the horses, but he took Warren to Ak-Sar-Ben because his great-nephew wanted to go.
At Ak-Sar-Ben, Warren had learned something about how to read the tip sheet, and it opened up a whole new world. Handicapping horses combined two things he was very, very good at: collecting information and math. It was not unlike counting cards at blackjack, except that the winning hand had four legs and ran around a track. Soon, he and Russ knew enough to put out their own tip sheet, the cannily named Stable-Boy Selections.
“We got away with it for a while. They weren’t the hottest sellers in the world. I mean, a couple of little kids selling this thing we typed up in my basement on an old Royal typewriter. The limiting factor was carbons in those days. You could probably only get in five or so carbons. But I got on the Royal and Bob Russell and I doped out the horses and then we typed up this thing.
“We were in the track, yelling, ‘Get your Stable-Boy Selections!’ But the Blue Sheet was the number-one tip sheet, and the racetrack was getting a commission on it. The Blue Sheet sold for a little more. At twenty-five cents, we were a cut-rate product. They shut down the Stable-Boy Selections fast because they were getting a cut on everything sold in the place except for us.”
When the Buffetts moved to Washington, D.C., the only plus for Warren was the chance to upgrade his handicapping skills.
“The one thing I knew about Congress was that Congressmen had access to the Library of Congress—and the Library of Congress had everything that had ever been written. So when we got to Washington, I said, ‘Pop, there