Starting from scratch, simply by picking stocks and companies for investment, Warren Buffett amassed one of the epochal fortunes of the twentieth century—an astounding net worth of $10 billion, and counting. His awesome investment record has made him a cult figure popularly known for his seeming contradictions: a billionaire who has a modest lifestyle, a phenomenally successful investor who eschews the revolving-door trading of modern Wall Street, a brilliant dealmaker who cultivates a homespun aura.
Journalist Roger Lowenstein draws on three years of unprecedented access to Buffett’s family, friends, and colleagues to provide the first definitive, inside account of the life and career of this American original. Buffett explains Buffett’s investment strategy—a long-term philosophy grounded in buying stock in companies that are undervalued on the market and hanging on until their worth invariably surfaces—and shows how it is a reflection of his inner self.
Roger Lowenstein has reported for the Wall Street Journal for more than a decade and is a frequent contributor to The New York Times and The New Republic. He is the author of Buffet: the Making of an American Capitalist
I recently re-read this Buffett biography (first published in 1995 and now re-issued with a new Afterword, dated January 2008) and then read Alice Schroeder's The Snowball: Warren Buffett and the Business of Life. Both are first-rate. Which to select if reading only one? That depends on how much you wish to know about Buffett's personal life, including his relations with various family members, and how curious you are about his personal hang-ups, peculiarities, eccentricities, fetishes, etc. If you can do without any of that, Roger Lowenstein's biography is the one to read. I also highly recommend the recently published Second Edition of The Essays of Warren Buffet: Lessons for Corporate America, with content selected, arranged, and introduced by Lawrence Cunningham.
As does Schroeder but in somewhat greater detail, Lowenstein rigorously examines subjects that include:
1. The development of Buffett's business philosophy 2. His most important business relationships over the years 3. His most important personal relationships over the years 4. His non-negotiable values 5. What Berkshire Hathaway accomplished under his leadership as CEO 6. Buffett's insecurities 7. His views on philanthropy 8. His social awareness 9. His relationship with Melinda and Bill Gates 10. Why no one else has achieved comparable results by following Buffett's advice
Warren Buffett is among the most effective CEOs in recent business history (at least since the conclusion of World War II) and there is certainly a great deal of value to be learned from his performance as both a leader and a manager. Although a business icon, he is also an exceptionally human being because of a unique combination of insecurities, hang-ups, fetishes, neuroses, etc. that various loved ones (notably wife Susie, daughter Susie, and companion Astrid) were able to manage with exquisite sensitivity. Like so many others, he cares more and more deeply than he is (generally) able to express. That said, one close associate and dear friend, Bill Ruane, suggested to Lowenstein after his book was published, "I'm not sure if you captured how [begin italics] tough [end italics] Warren is." Perhaps no one can but credit Roger Lowenstein with providing in this volume a thorough, balanced, multi-dimensional , and insightful explanation of how an ordinary man in almost every other respect accomplished greater success in business than almost anyone else ever has...or ever will.
Everyone is interested in a billionaire! How he did it? Where did his ideas come from? Was he worthy of it? One ends up forming an opinion on such people very easily. Warren Buffet, unlike the Gates and the Jobs of the world, is however not that public a figure. His intelligence does not necessarily impact the common man's life so openly, and so frequently as it does for a few others. But having said that, reading about him has made me realise that not knowing about Buffet's ideologies, his eccentricities and his idiosyncracies, apart from his genius in doing what he does with such clarity of mind, is like knowing everything about Da Vinci but for his Mona Lisa masterpiece. Roger Lowenstein, in a brilliant manner, brings out the smartness that lay behind this young Omaha kid called Warren Buffet that eventually made him the second richest man in the world. Lowenstein, make note, has written this brilliant book without any interaction with Buffet himself who "would not collaborate in any way, nether attempt to interfere with the project". But maybe this handicap is what allows Lowenstein to dig deeper behind the rationales of Buffet's stock purchases, to understand his thought process and to portray to the reader the rise of the 'oracle of Omaha' across the decades in a backdrop of a volatile stock market wherein new theories came and went in a flash, that sticking to your beliefs required courage and determination. Buffet has that in aplomb! A must read book (you will enjoy it more if you have ever traded in stocks yourselves) about a genius who comes probably just once a century...
An excellent book. I almost didn't read it as I've read a few Buffet books and usually find them quite tedious. Not this one! I loved Lowenstein's perspective as a long-time investor of Buffet's and a well regarded value investor/author himself. The result is an intimate but outside look at what made Buffet into the investor and man he is today.
Buffet is a mess of seeming contradictions, his obsession with accumulating money yet his refusal to spend any of it, his remarkable self confidence yet his apparent shyness, his analytical approach yet his refusal to use a computer or even a calculator to analyze investments ("if I don't understand the number in my head, then I won't understand it from a computer!"), his outspoken criticisms of modern CEO behavior yet his numerous CEO friendships, his hatred of all things wallstreet yet his continual close relationship to it. This man contains a multitude!
Lowenstein gets to the core of these contradictions in a revealing narrative of Buffet's formative years. We're let in on his distant yet highly principled congressman-father, his unfulfilled raging-mother, his intense desire to be rich from an early age, his love of numbers, his conservatism and loss-aversion, his unyielding resistance to change, his shy but outspoken style of showmanship (he honed this by taking classes), and probably most important in explaining his success, his disciplined adherence to the Graham-and-Dodd value principles (although applied in his own unique way).
He comes across as incredibly intelligent and widely read on current affairs but able to distill things down to a deceptively simple narrative. His consistent valuation framework allows him to cut through the cacophony of Wall street chatter that leads to short term thinking, herd mentality, pie-in-the sky valuations, and eventually undersized returns. As a result he blows away the market for five decades, virtually every single year. There has never been anyone with close to his record, nor will there be for many, many generations to come.
One thing I realized is that Buffet has spent a LOT of time reading stacks of annual reports all alone in his study. This is where he put his 10,000 hours and where he derived the insight behind his decisions. He has a wide network and makes a lot of calls but these are usually performed after he has an idea. He also keeps a quiet clutter-free office (none of his staff even know what he's cooking up next) and cuccoons himself in with piles of raw information - no computers, bloomberg screens or endless meetings and calls typical for a money manager. It reminds one of the Flaubert advice, “be regular and orderly in your life so that you may be violent and original in your work.” His relationship with west-coast-based Charlie Munger seems to have provided the perfect sounding board for his ideas. Just enough of a wise outside council to give him the confidence to act aggressively without over-analyzing or diluting his ideas. When things are cheap, Buffet acts quickly and aggressively (no investment committees here). He uses his numerical margin of safety in place of extensive discipline. A scan of the numbers, a quick call to Charlie, and Bam! $10 billion ready to go to action. Buffet's mantra.
"Be greedy when others are fearful and fearful when others are greedy."
Simple as that, really!
In summary, I highly recommend this book to anyone with an interest in investing. This is up there with the Intelligent Investor, the book that changed Buffet's own life when he read it in high school...
In some ways this guy is the ultimate Mr Burns-like single-minded capitalist. But to be fair to him: he's consistently fought for his income bracket to have to pay much higher taxes, repeatedly attacked Bush's tax cuts for the rich, and finally commited to giving away almost all of his money to the Gates foundation. In some ways I think he is quintessentially American, in the same sense that Citizen Kane is the quintessential American movie.
I read the Snowball by A. Schroeder but wanted to see how this earlier Bio compared. Many of the details of his story are similar and dealt with in the same chronological order. Even though the Snowball gives a lot more personal almost intimate details about WB's life, there are some good different insights here too.
The value principles resurface as expected. In random order some of my takeaways are as follows. Have the purchase price so attractive that even a mediocre sale would do. Put all your eggs in a basket and watch that basket. Have the proper temperment set. Keep a margin of safety. Be detached from the daily market moves. Look at statistics not so much subjective analysis. Save your credit for that is better than money. Stay rational, a horse than can count to 10 is a great horse but not a mathematician. Choose the right heroes.
But there was also a few other insights that I haven't seen detailed anywhere else so far. Munger desperatly wanted yo get rich not to buy ferraries but for the independance. I had never heard about the mba student that tried to learn from him, Daniel Grossman, the tenis star in omaha. He was just overwhelmed. The solomon case is much more detailed than in Alice Schroeders' book and I didn't t realise he respected and admired Gutfreund. I don't remember that it was that obvious in the Snowball. It's funny also to learn that Samuelson the nobel laureate on market efficiency theory, eventually bought a big stake in Berkshire just in case he was wrong lol. Finally I had no clue that B. Greenwald said he is not really a Graham and Dodder, but that he is more into speculating not investing.
For some strange reasons I could not make myself to like the book and the guy. Buffet is not an average Joe, but the book becomes so exhausting about boring life of Buffett that I had to stop. I expected that this book would inspire me. Instead I see this form of money loving as something perverse and not healthy. Author tries to convince us that Buffet is not greedy, he just likes frugality and simplicity. I do not agree. The kind of obsession Buffet has over his money is repulsive, even wrapped into soft whispering propaganda that tries to inverse the meaning of words.
I know that I am being subjective writing this, but it's more for the future me that for others. And this book is biased as well. It is biased from the point of the people living in the privileged world of white man, upper-middle class. Some people will like this book and might even find some wisdom about managing the business or "money-making". I do not see any wisdom in this book for myself and for an average industrial worker trying to pay his bills to survive. At this moment I am so disgusted at my former self, when I was working as programmer, ignorant of the life around me, the context I work in. I had a good salary but I was not doing very ethical work myself. But many programmers are fine with that as long as paycheck is heavy and so called financial independence is not far away. Not many people in our world are so privileged like programmers are. Unfortunately, some programmers are paid to be ignorant.
This book was not for me. I am kinda happy that I am so different from Buffet and have very different goals. On that note, I am going to spend more time with my family.
I thoroughly enjoyed this book, finding it entertaining and informative, which when you think about it, is unusual when talking about finance and boring stuff of that nature. In reality, it’s a character study of the man himself—and he’s interesting. Buffett’s genius is largely genius of character—of patience, discipline, rationality and resourcefulness. He appears to be one of the few capitalists who got super rich without leaving a trail of victims and suicides (as one would find in a bleeding Hemingway novel). Hey, he said 'Writing’s easy—all you do is sit at your typewriter and bleed!' Back to Buffett…
Unlike the modern portfolio manager, whose mind-set is that of a trader, Buffett risked his capital on the long-term growth of a few select businesses. He once wrote that he would no more take an investment banker’s opinion on whether to do a deal than he would ask a barber whether he needed a haircut.
But just imagine investing $10,000 with Buffet in 1956 and it being worth $550 million today! What I learned from this book was that Buffett looked for two things in particular: companies that were well run by hardworking, dedicated people and then above all else, after careful study of financial documents—intrinsic value!
One example of this is the famous Mrs. B. She’d arrived penniless from Russia as a very young woman. She settled in Omaha and started selling bits and pieces and then, furniture. Due to hard work, her American dream materialized. Buffett had had his eye on Mrs. B’s business for years. She’d grown it into a mammoth undertaking, so big, she needed a golf cart to tour her store. In the end, Buffett leaves his office and strolls in to see the ninety-one-year-old lady. The conversation goes something like this: ‘Hey, d’you wanna sell this business?’ ‘Sure.’ ‘How much d’you want?’ ‘Sixty million!’ ‘Done. I’ll have it drawn up by tomorrow,’ Buffett said.
There are many nice little quotes throughout—or what we might call ‘Buffettisms’. Buffett spoke of about an oil prospector, and I can almost hear him saying it: He arrived at heaven’s gate only to hear the distressing news that the “compound” reserved for oilmen was full. Given permission by Saint Peter to say a few words, the prospector shouted, “Oil discovered in hell!”—whereupon every oilman in heaven departed for the nether reaches. Impressed, Saint Peter told him there was now plenty of room. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to the rumor.
But ‘Character—not money—was the basis of credit’ was one of Buffett’s strongest beliefs, according the author Roger Lowenstein. This fact, along with his success, certainly seemed to win him a lot of admirers.
He became very close to Katharine Graham of the Washington Post. She seemed to depend on him in the end. Who could blame her! Graham estimated that she talked to Buffett ‘maybe every other day or so, several times a week.’ When Graham had to give a speech, which she found frightening, she would call Omaha, and Buffett would deliver a perfectly metered response, off-the-cuff. She actually began taping their conversations. He speaks in finished paragraphs. I’d say, ‘What?—Could you say that again?’ He can’t do it. It comes so fast he can’t retrace it. It takes your breath away…. After Buffett had been on the board awhile, he began to push her to be more self-reliant. One time, she asked him to come to Washington to negotiate a swap of the Post’s television station in Washington, plus some cash, for a station in Detroit. ‘No,’ Buffett told her. “You do it.” “Okay, tell me how much to give them,” Graham said. “No—you figure it out.”
Like many a multi-millionaire, one understands his mindset and how he got to be one! Another time, when they landed at La Guardia, Graham was in a hurry to make a telephone call and asked if he had a dime. Buffett fished a quarter out of his pocket. Not wanting to waste fifteen cents, he started outside to change it, like any other multimillionaire from Nebraska. Graham hollered, “Warren, give me the quarter!”
His marriage to Susan, was unconventional and his devotion to her, touching. She decides to become a nightclub singer and he encourages her. Then she goes off to live by herself. But still they remain close somehow, often attending functions together. Even then, she would nestle next to him and take his hand in public, as though they were teenagers, knowing that she was his muse.
His devotion to Susan is touching. When Susie was onstage, Buffett would watch with a beatific expression, as if overcome by rapture. He told a friend, “When Susie sings, it is so beautiful I can’t breathe.’
The numbers Buffett deals in are staggering. He becomes interested in Coca-Cola. Keough the CEO calls Buffett: “You don’t happen to be buying any shares of Coca-Cola?” “It so happens that I am,” Buffett replied. By the next spring, Berkshire had acquired $1.02 billion worth, or 7 percent of the Coca-Cola Co., at an average price of $10.96 a share….In a mere three years, Buffett’s stake in Coca-Cola would soar to an astounding $3.75 billion—roughly the value of all of Berkshire when it had begun investing in Coca-Cola.
The episode with Salomon was amazing and worthy of a movie. Some misdeeds by Salomon employees had come to light with a bloodbath ensuing. Buffett, with no real experience of handling a large Wall Street firm, took control and did well. His common sense and honest dealing stood him in good stead.
Instinctively, he shrank from confronting his adversaries, but he was superb at winning them over without a fight. …He did not so much convince; he disarmed, he co-opted. …He had to assume, very publicly, as only Buffett could, a personal responsibility for the scandal—to show that the stain was not only purged but deeply and sincerely regretted. The congressmen ascended to spasms of telegenic outrage.
Buffett’s was tough on those who failed the public and the firm. …As far as I am concerned, those responsible deserve absolutely nothing from Salomon Brothers, not a dime in severance pay, not a dime in remuneration of any kind, and not a dime to pay for their defense, either … nothing but a swift kick in the butt out of Salomon Brothers and onto the street.… ‘I would like to start by apologizing for the acts that have brought us here. The Nation has a right to expect its rules and laws will be obeyed. At Salomon, certain of these were broken.’
Buffett thought that executes were overpaying themselves in bad times. Buffett decides to act boldly. On October 29 he took out a remarkable two-page ad in the New York Times, the Wall Street Journal, the Washington Post, and the Financial Times, reproducing Salomon’s third-quarter report. The heart of it was a letter from Buffett denouncing the company’s pay scale. He emphasized that he had no problem with extraordinary pay for extraordinary performance. But Salomon’s “share-the-wealth” system was subsidizing all—even the mediocre—at the shareholders’ expense. Having said this, Buffett dropped a bomb. He was lopping off $110 million from the pool set aside for bonuses for 1991. As a result, although profits that year (earned before the scandal) were double those of 1990, bonuses would be slightly less than in 1990. Those who didn’t like it could walk…No one on the staff saw him waver, even in the slightest. This was Buffett’s essential virtue—the courage to stick to his course.
I wish I’d been born with a fraction of the wisdom of Warren Buffett. As an atheist he bears out the fact that you don’t need to be a Christian to be honest and possess integrity. He has all that built in. His wealth has been derived by careful study of the facts and having a computer-like brain helps. (He doesn’t own a computer or an adding machine). He is also a man of downhome ordinariness who enjoys Cokes or Pepsis and hamburgers for dinner.
I find his politics interesting. When I grew up, people with money, were said to be right wingers and conservatives—‘filthy capitalists!’ Lately, I’ve wondered how come most billionaires seem to be left wingers, ‘progressives’ and communists. This book, to some degree, helped clear up that mystery.
I've been following the markets for the better part of 25 years, and over the years I've come across many books, articles, and profiles of Warren Buffett; seen him interviewed countless times on CNBC, even watched a documentary about him on Danish television last week, so I approached Buffett with reasonably low expectations - how much more was there to learn? Quite a bit apparently. This book is as good as the book on his partner Charlie Munger (previously reviewed) was bad. Lowenstein does a great job getting to the root of Buffett's unique approach to investing - his almost monomaniacal obsession with studying companies - and the detrimental impact this pursuit has had on his family. It's an inspirational story though of a great mind and a truly independent thinker - someone almost as comfortable taking on taboo social issues as he is uncovering undervalued companies. And with the book written in the mid-nineties it focuses on Buffett's formative experiences (the Berkshire-Hathaway acquisition, his relationship with Katherine Graham of the Washington Post, and saving Salomon Brothers) many of which I was less familiar with. The book is a bit dated, despite an epilogue added in 2008, as Buffett is difficult to keep up with - now into his eighties, the man who hates change, is still making headlines. Overall I'm pleased to report that Buffett the book is as interesting as Buffett the person.
I thoroughly enjoyed this journey into a highly original and principled mind.
The detailed look into his thought processes, values and the passion of his life - investing - was complemented by lowensteins insightful commentary on Buffet's nature - a task rendered all the more difficult by Buffets private nature.
Book Review: Buffett The Making of An American Capitalist Roger Lowenstein This book was written back in 1995, so it is severely dated. It does, however, give us an idea of what Buffett was like at that time. He may have changed since then.
I used to be able to say I liked almost everything about Buffett. I would use the word “almost” because, since I don’t know him personally, there could have been something I did not like about him. In reading this book, I found out what that was.
I am a Fundamental Christian. By that term, I mean I believe that the Bible is true in every word. I do agree that there are errors in my understanding of the Word. But, God does not make mistakes and where there are translation errors God had a reason for that. I believe that life begins at the split second of conception and that no one, other than God, has the right to end that life, no matter what the reason.
Buffet, as far as this book states, does not believe in God. He is very afraid of dying. Now, I don’t want to die, but I know when I die I will be in heaven. Since Buffett does not have that to look forward to, he has reason to believe that when you die you cease to be.
Buffett is also said to be a large supporter of Planned Parenthood. The book states that Buffett sees donating to Planned Parenthood as an investment in the well-being of the world. The book states that Buffett sees this as a way to prevent over population of the world. If Planned Parenthood’s only ways of preventing over population was to provide sex education as well as to teach abstinence and, barring that, barrier methods to birth control, I would agree with him. However, I believe that God has a reason for every conception. Every life has meaning and every child should have a chance to make their mark on the world.
All of that being said the book is great. Buffett the man has a great sense of business and a great success record. Companies call on him to bail them out when they are in a jam. Buffett studies business models constantly and has an amazing head for business figures.
Buffett sort of compares with Commodore Vanderbilt in that he took an approach to money that was hands-off. When Buffett’s children need to borrow money, he tells them to borrow it from a bank or he has them sign a promissory note and they pay prevailing interest rates, according to the book.
All-in-all, I think this is a good book, well worth reading and a great addition to my library.
Book Review Policy My policy on book reviews is to give you my honest opinion of the book. From time to time publishers will give me a copy of their book for free for the purpose of me reading the book and writing a review. The publishers understand when they give me the book that I am under no obligation to write a positive review.
If you will look at all my reviews, you will see that there have been occasions when I have written a negative review after having been given a book.
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I am disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255 I purchased this book through Friends of the Library. Contact your local library and find out what excellent deals they offer.
The first major biography of Warren Buffett. Written without active support by Buffett (he also didn't discourage anyone from working with Lowenstein). I felt Lowenstein's writing in When Genius Failed, the account of the failure of Long Term Capital Management, was stronger. In contrast to Snowball by Alice Schroeder, this book focused more on Buffett as the investor and major owner of Berkshire Hathaway. Charlie Munger's role and contributions are largely sidelined in this story. Too bad, since Munger had a significant role in the evolution of Buffett's thinking from pure Graham to a blend of Graham/Fisher/Munger/Buffett. Nonetheless, it does a good job of going into detail in places where Snowball doesn't (like the Salomon Brothers episode). Aspects of his relationship with Susie Buffett were also left out (especially after she left for California). Definitely has more of a tilt of Buffett as an "American capitalist" than Buffett as a person.
Đây là cuốn sách đầu tiên mình đọc về đề tài chứng khoán, nhưng nó không đơn thuần là các kiến thức dạy về chứng khoán mà là quá trình trở thành nhà tư bản Mỹ, một trong những tỉ phú giàu nhất thế giới chỉ bằng việc đầu tư giá trị. Cuốn sách giúp mình có cái nhìn đầy tôn trọng về việc đầu tư chứng khoán - đó là môn nghệ thuật, cần nhiều nỗ lực và chất xám để mang về một thương vụ đầu tư thành công. Cách thức đầu tư của Buffet đã cho mình những tư duy mới về đầu tư: - hiểu lĩnh vực b���n đầu tư - làm việc như điên để tìm ra công ty tiềm năng mà giá cổ phiếu < giá trị - nhìn được sự phát triển dài hạn của công ty - hốt cổ phiếu của công ty đó - kiên nhẫn chờ đợi (có thể là vài năm hoặc vài chục năm) - thu về số tiền lớn không tưởng (nhờ vào sư lợi hại của lãi kép)
Buffett is a modern day hero. Lowenstein does a great job of telling his story in this book while also hammering home some of the reasons why he is so successful: discipline, sticking to his circle of competence, and I dare say most importantly his midwestern values (honesty, fairness, frugality).
This book isn't revelatory, because the Warren Buffet story has been told many times. The Midwesterner coming from a family of grocers, with a strict Republican Congressman father, parleys some pinball machine earnings and the advice of Columbia University Professor Benjamin Graham into one of history's greatest fortunes. But this is a model biography, one with lucid prose and easy grace, that weaves the story of Buffett into the story of American investing, politics, and business in the 20th century.
Roger Lowenstein does manage to cloud Buffett's picture of an idyllic upbringing. Buffett's father was fundamentally decent, but also strict; and he was not just a conservative, but almost a radical, and for awhile a member of the John Birch Society. His mother, although kind, had manic and violent episodes. One friend recounts how Buffett would almost recoil when his mother came to hug him. Yet Buffett's sunny disposition, hyper-rationalist love of numbers, and competitiveness were all there from an early age, when he would memorize almanac city population numbers with his friends. Perhaps influenced from a few hard Depression years after his birth in 1930, he also wanted to be rich. In his early teens he already said he would jump off a building if he wasn't a millionaire by thirty. By his 20s, he was already worrying about his future fortunes spoiling his children.
Buffett seems to have embodied John Maynard Keynes dream that stock investors would "marry" their investments, instead of just treating them as a short-term fling. Buffett's desire for continuity was indeed manifest in his stock picks. He said his favorite holding period was "forever" and kept stocks like GEICO for half-a-century. At one point in the 1980s, Buffett's Berkshire Hathaway only held three main stocks, GEICO, Washington Post, and Cap-Cities/ABC.
For fans of the Efficient Market Hypothesis, like myself, Buffett, much like James Simons, has long presented a dilemma. This book does show that Buffett did more than just pick stocks. He sat on the boards, he encouraged and advised CEOs, and, for some of his wholly-owned companies, he distributed capital. For a brief time in the early 1990s he took over as chairman of Salomon Brothers. On the whole, however, one might have to accept the possibility that Buffett was able to find a handful of truly great picks that really paid off. In general, he liked companies that were like a "toll bridge," where everybody had to cross over. That's why he loved one-town newspapers, like the Buffalo News and the Washington Post (after it ate up the Washington Star and endured a strike).
In the 2007 afterword, Lowenstein asks himself if there is anything he would change about the biography. The one thing, in retrospect, that he thinks he didn't fully capture about Buffett was his toughness. This avuncular (the word is almost inevitable when discussing Buffett), absent-minded, affable Midwesterner was also hard as steel. Unlike other investors or executives, he said "No" frequently, and didn't suffer fools. But the other thing I think this biography misses is Buffett's competitive streak. Lowenstein attributes Buffett's accumulating tendencies to his lifelong fear of death. He was an agnostic from a religious family who loved the familiar more than anything, and so of course the radical break of death did carry a particular terror for Buffett, one which the vertiginous and infinite possibilities "compounding interest" almost seemed to comfort. I would also say that the book misses some of Buffett's competitiveness, which is expressed in his desire for a level playing field and his strong belief, vindicated of course, that he could win on one.
But for a portrait of a man who, on-and-off for decades, has been America's richest man, and yet somehow one of its most decent, this book can't be beat.
- Buffet had one keen interest – investing based on fundamental analysis of businesses – and thoroughly enjoyed his life and achieved unbelievable success by being laser focused on pursuing it - He had a remarkable ability to focus on the essence of things. Make a very small set of very important decisions within his realm of competence to achieve great success - Otherwise he kept his life super simple. He owned businesses but didn’t manage them. He didn’t manage people, and he made all key decisions directly instead of by leveraging others – no stock brokers or analysts, no public relations people, etc. His calendar was wide open to spend his time as he wanted. He chose, as much as possible, to only to work with people that he liked - Essence of value-based investing: o (1) price is what you pay, value is what you get o (2) buy based on the fundamental value of a business and not based on speculation – i.e. how you predict the crowd will value a business at any given time o (3) buy with a margin of safety – good businesses for cheap, or great businesses for average price o (4) have managers run businesses with an owner mindset, i.e. with a focus on return to capital - The companies that Buffet invested in benefited greatly – Buffet would own a large share of the company’s stock near indefinitely, and let executives run the show – as long as executives operated as owners and remained laser focused on returns to capital. This gave these companies a large advantage compared to companies who had to stay vigilant wrt quarterly earnings or PE-owned companies who operated with an eye toward maximizing company value at a 5-7 year time horizon - Buffet captured the public imagination by acting in direct contrast to the Wall Street stereotype. Folksy, principled, focused on long-term relationships vs. short-term results, and operating with high integrity. He also communicated his vision and principles through his annual letters and shareholder meetings - Buffet also had many flaws. He was remote and not particularly empathetic. His wife separated from him, one can speculate in large part because he was not there emotionally for her. He was not fully there for his children - Buffet is often portrayed as a principled investor who was highly successful at capitalism and in turn helped make capitalism function effectively – through a patient and efficient allocation of capital. That said, Buffet also (1) helped facilitate the formation of a newspaper monopoly in Buffalo – thereby reducing the diversity of reporting and opinions, (2) invested in tobacco and sugary drink companies, and (3) bought junk bonds as long as they were cheap. It is clear that Buffet is no saint and capitalism is not perfect - Buffet realized he was not well suited for philanthropy, and after many years decided to give his wealth to the Gates Foundation to fight global diseases. Aligned with Buffet sticking to his realm of competence and trusting a few key people
This entire review has been hidden because of spoilers.
I'm kicking myself for not reading this book earlier. This is a fair portrait of Warren Buffett's life and career as an investor. He is simultaneously seen as universal and unapproachable. His easygoing, folksy nature appeals to any student of capitalism. His photographic memory, gift for mental math, and singular dedication to studying makes one wonder if anyone else could achieve what he has. Lowenstein (author of When Genius Failed, also a wonderful book) paints a picture of his motivations as both deeply personal (Buffett's innate desire to wanting to maintain continuity, connections to his past) and strictly logical (his refusal to treat small sums of money any differently from large sums, judging everything by the yardstick of return on capital). Across a career spanning nearly 7 decades, Buffett has turned a small stream of cash originally generated by a poor textile business into one of the largest conglomerates the world has ever known. While doing so, he evolved from a Ben Graham disciple focused on statistical cheapness (companies trading at a fraction of their net working capital) towards a focus on high quality businesses like Coca-Cola. There are many lessons in the book that I only appreciate now having worked in the industry, and I'm sure there are many more to be revisited in the future when I come to understand many of the things that Buffett has already known. For any student of investing, this is a must read.
To summarise this book, as correctly described about Buffett in chapter 14 (The Eighties) - "In the old days he was cigarette butt investor. He looked for value.Then it got hard to find such deals and he became a franchise investor , he bought great businesses at reasonable prices. And then he said, ' I can no longer find good businesses at even acceptable prices, and I will take advantage of my size and teach the world a lesson about long-term investing'. " This is how Buffett's life has progressed in these 3 phases and this book has described all 3 phases in a detailed manner.
Chapter 17 ( A brief introduction to darts), wherein, drawbacks of Efficient market theory are explained and chapter 18 (Secrets of the Temple), wherein Buffett explains his philosophy about investing - are must read chapters. Chapter 21 and 22, describe 1990s treasury bond scandal at Salomon Brother's and how Buffett handled it by serving as interim Chairman.
This book has highlighted various qualities of Buffett. However, his patience - to sit on huge pile of money till he gets suitable opportunity to deploy it - is an astonishing one.
Once or twice a year I come to read a biography of a great man and I just fall for them. This was definitely one of these occasions, I don't think it's possible to dislike this man. His thorough biography is full of things I like in one. Early attempts at what they eventually succeed in, business deals described in detail, character integrity, etc. I rarely go as far as naming someone my idol, but this past ten days Warren Buffet has become one.
Assez incroyable de voir qu’un enfant puisse avoir autant d’obsession pour la richesse ce que je peux comprendre vu sa pauvreté au fil des années il a développé une aisance et une intuition admirable,il a réalisé ses rêves et cela force le respect mais vivre en ne pensant qu’à l’argent est ce que ça suffit au bonheur?
A brilliant book chronicling the life of greatest investor, and one of my few personal idols, the world has seen!! Contains several pearls of gem about his personality, temperament and his genius that led to a follower-ship bordering on idolatry. From several stories covering his impeccable value-investing style and principles, to instances showing his less-than-perfect personal relationships, this book is a must-read for people wanting to know more about the Oracle of Omaha.
WB là tấm gương về việc giữ gìn đạo đức trong kinh doanh vừa tìm kiếm lợi nhuận. Trái ngược với Wall Street đầy rẫy các câu chuyện đánh đổi, chọn lựa. Người ta thần tượng WB về điều đó, và cũng có nhiều kẻ căm ghét vì điều đó.
Truly learned a lot about this famous man. I enjoyed learning about his investments, but I was even more fascinated by the author’s analysis of what drives Warren’s commitment to the companies he invests in; namely that Warren, not being a religious man, fears death and sees his investments as his lasting legacy.
Reading this biography clarifies some of the traits that have contributed to Warren Buffett's astounding business success: his laser-like focus, his unusual capacity to perform math in his head, and his appreciation for true value as opposed to what I'll call "bling appeal." Insightful and meticulously researched, Lowenstein sheds light on the personality and thought process of one of the world's richest men, who started off in his in-laws' basement with little more than $800 and parlayed it into many billions.
There were many unexpected aspects to Buffett's story. Unlike many wealthy people, he is not obsessed with collecting glamorous possessions. This exchange is typical:
"He did ask Susie to upgrade his VW, explaining that it looked bad when he picked up visitors at the airport. But he didn't have the slightest interest in it.
'What kind of car?' Susie asked.
'Any car. I don't care what kind.' (She got him a wide-finned Cadillac.)" True, this was early in his career, but it is revealing of his attitude.
I also did not expect a man like this to have a healthy marriage, but Lowenstein confirms, he does, although he seems slightly distant from his children.I particularly enjoyed the section on his first major acquisition where Buffett and the indomitable, 4 foot 10 inch Mrs. B, an immigrant who created the largest furniture business in Omaha from nothing, hammered out a sixty million dollar deal. Upon closing Mrs. B stated, "Mr. Buffett, we're going to put our competitors through a meat grinder." This was Buffett's ideal--a partner who was totally focused, competitive, and very shrewd. Lowenstein skillfully escorts the reader through many fascinating incidents, showing the human side of his subject, while helping one grasp his unique financial genius.
Reading this work in the bull market of early 2021, with valuations at unimaginable highs and "fashion" stocks (as referred to therein, but now popularly known as "meme" stocks) rising and falling like the pucks of amusement park hammer games -- one finds prophetic notes of admonishment from strikingly similar times. Each bull run, Lowenstein points out, is characterized by some self-serving rationalization. Yet the reader nevertheless wonders, if he has read this biography in his own path of development as an investor as I have, whether Buffett's strikingly simple dicta and his down-home ethos might yield some fraction of its fabled returns today for the man himself, let alone in the hands of the yeoman retail investor. One grimaces to read, for example, that the price-to-earnings ratio in the low 20s at the end of the 1980s was unsustainable and augured ruin, when PE ratio has been even higher that that for much of the period since the book's publication. This question of generizability relevant not just because it's what readers will wonder in their self-interest, but because Buffett saw as a matter of honor the defense of his investment philosophy.
That philosophy, derived from Buffett's mentor Benjamin Graham (and Dodd, a character given short shrift in this book) is as follows:
"By focusing on the earnings, assets, future prospects, and so forth, one could arrive at a notion of a company’s “intrinsic value” that was independent of its market price. The market, they argued, was not a “weighing machine” that determined value precisely. Rather, it was a “voting machine,” in which countless people registered choices that were the product partly of reason and partly of emotion.18 At times, these choices would be out of line with rational valuations. The trick was to invest when prices were far below intrinsic value, and to trust in the market’s tendency to correct."
There are important, implicit arguments contained in the logic here, and Lowenstein (and Buffett) subscribe to those corollaries much as the economists endorsing the Efficient Market Theory spun down their dizzying path regarding beta and returns. The biggest is that there is a distinction between speculating and investing. As Graham distinguishes the two in The Intelligent Investor,
"An investment operation is one which, on thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative."
This distinction at first blush seems reasonable, and would have seemed even more reasonable when 1/3rd of the equities market was trading below its liquidation value. 80 years later, investors are savvier, richer, and those opportunities don't exist anymore, as Graham would note in his older years. Moreover, the distinction is far flimsier than it might first seem. Compare the two quotations above. If considering "future prospects" is within the purview of value investing, and forecasting is at best a game of loose probabilities (Buffett goes as far as to say forecasts may tell you something about the forecaster, but nothing about the future), one wonders whether there's any meaning whatsoever left to the distinction. If a company trades for 30x earnings but has all propitious signs of future market dominance, it could be considered a "value investment" in some not unreasonable framing. What is "cheap" and what is "dear" when companies hemorrhage money year after year to gain marketshare and their paper trades with the optimism of untold future returns?
Still, in major ways the Buffett dogma rings clearer in our benighted "speculative" times than perhaps at the time of publication. If I were a disciple, these would be the verses I hold dearest:
- Invest in companies and industries you understand. You have greater odds of picking winners in your domain of expertise than in the growth sector of vogue. Likewise you should understand what the company makes and how it will derive a profit and resist competition in the future. You should have at least a theory about why the market may be undervaluing the company. - Buy stocks 'like you shop for groceries' and buy intending to hold for a long time. Wait for what seems like good value on stocks you want to hold. Buffett, ever the fan of parables, would say you should be happy to hold the stock even if you were unable to see the price for years, the way you don't lose sleep over the value of your home even though you don't see a daily ticker. - When the market is greedy, you should be afraid, and when the market is afraid, you should be greedy. When everyone else is hesitant and the market is low, that's your time to strike -- not when everyone is shouting and pointing at the hot stock. - Diversification is not a panacea. If you have done your homework and understand the company and the price is ripe, put your weight behind it. Spreading your investment decorrelates your risks, but also your returns, and merely dilutes the earnings of having picked well. - The market is not perfectly efficient. I came into this book largely subscribing to the EMT, and I still believe it is the most rigorous starting point for any reasoning about alpha in the market. Yet the market is not (yet) the product of perfectly rational and comprehensive algorithms. The volatility of stocks and the booms and busts belie the idea that everything is priced in perfectly all the time. If the price is a perfect reflection of the value of a company, which price do you trust more, the price this morning or the price 6 hours later, after the release of no new public information for the market to impound. Humans are in the present day still the largest elements behind capital allocation in the equity markets, and humans are not infallible rational actors.
Finally, I'll say that while Buffett makes a rather dull subject for a biography in some of the areas storytellers often like to shine their spotlights -- Lowenstein does a good job of extracting what's interesting and telling from these areas, e.g. upbringing and family relationships. The broad takeaway of these element is that Buffett has always been a man of decidedly forceful conviction around his ideas, some of them idiosyncratic, some defined by an almost naive idealism, but almost all of them from a deeply honest and moral place. I don't generally admire rich men for being rich, but in many ways I find Buffett's sincerity and his brand of generosity to be endearing. He has one more fan to add to his ever-growing throngs.
Warren Buffett might be the most enigmatic man of our time. While everyone knows that his past half century of investing has made him into the richest man in the world, nobody seems to know much about him beyond this. The few anecdotes we sometimes hear- he still lives in the same modest house in Omaha, he doesn't drink anything stronger than coca-cola, he drives himself around in a very basic Lincoln- only pique our curiosity more.
Roger Lowenstein is well known for writing extremely engaging and thoroughly understandable books about business subjects (such as When Genius Failed). This book is no different. He really does a great job of shedding some light on one of the most interesting men in american history- I was fascinated from cover to cover.
The book was published in 1995, and with Warren still going strong today, there is obviously a 14 year gap that needs to be filled in. Mr. Lowenstein- how about a sequel???
Add one star to my rating if you generally enjoy business books and subtract one if you don't.