The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [73]
On his first day in David Dodd’s class, “Finance 111–112: Investment management and security analysis,” he recalls that Dodd broke his customary reserve and greeted him personally and warmly. Warren had already more or less memorized the course textbook, Security Analysis, Graham and Dodd’s seminal book on investing.4 As the principal drafter and organizer of Security Analysis, Dodd was of course intimately familiar with its contents. Yet when it came to the text itself, Buffett says, “The truth was that I knew the book even better than Dodd. I could quote from any part of it. At that time, literally, almost in those whole seven or eight hundred pages, I knew every example. I had just sopped it up. And you can imagine the effect that would have on the guy, that somebody was that keen on his book.”
Published in 1934, Security Analysis was a mammoth textbook for serious students of the market, laying out in much more detail the innovative concepts that were later summarized for a popular audience in The Intelligent Investor. Dodd had taken meticulous notes at Ben Graham’s lectures and seminars for four years, organizing them and enriching the examples with his own knowledge of corporate finance and accounting. He structured the book and proofread the galleys from his summer home on rustic Chebeague Island in Maine’s Casco Bay, in between golf games and mackerel-fishing tournaments.5 He described his role modestly: “The genius was [Graham’s], supplemented by long experience of a distinguished character, and exceptional literary talent. My most important role was to be a devil’s advocate on a variety of issues where I thought he had got himself out on a limb.”6
Dodd’s class focused on valuing defaulted railroad bonds. Since childhood, Warren had been slightly obsessed with trains, and, of course, thanks to the long, checkered, and colorful history of the Union Pacific, Omaha was practically the center of the universe when it came to bankrupt railroads.7 Warren had read his favorite book on bonds, Townsend’s Bond Salesmanship, for the first time at the age of seven after making a special plea to Santa Claus for this tome.8 Now he took to the subject of bankrupt railroad bonds like a duck to the warm spring rain. Unsurprisingly, Dodd showed an unusual interest in him, introducing him to his family and taking him to dinner. Warren soaked up the fatherly attention and also felt sympathy for Dodd, who cared for his mentally ill wife.
In class, Dodd would ask a question and Warren’s arm would shoot into the air before anyone else’s, waving for attention. He knew the answer every time, wanted to give it, was not afraid of attention, and did not mind looking silly. Nor did he seem to be showing off, as a classmate recalled; he was simply young, eager, and immature.9
Unlike Warren, most of his Columbia classmates had little interest in stocks and bonds and were probably bored by this mandatory class. They were a remarkably homogenous group of men,10 mostly headed to General Motors, IBM, or U.S. Steel after they got their degrees.
One of them, Bob Dunn, was on his way to becoming the academic star of the class of 1951. Warren admired his presence and intelligence and often went over to the dorm to visit him. One afternoon, in the other room of Dunn’s two-room suite, Fred Stanback found himself wakened from a nap by a loud voice. Half asleep, he began to realize that the voice was saying such interesting things that he didn’t want to doze off again. Rising from his bunk, he wandered