There are 11 books sitting on my book shelves that are about Warren Buffett – some of them I bought, others were given to me.
Sometimes I have been asked what the best book ever written on Warren Buffett is and I have always said that it’s Roger Lowenstein’s 1995 book: Buffett: The Making of an American Capitalist. However this is no longer true.
I was lucky enough to have been given a copy of The Snowball: Warren Buffett and the Business of Life (by Alice Schroeder). This book is that much better than Lowenstein’s book simply because Buffett, his family and his friends cooperated with Schroeder on the writing of the book.
Schroeder interviewed Buffett over the course of five years for this book and this brings many insights to the reader that are absent from all the other books written about Buffett.
As Buffett is never going to write an autobiography, this book is as close as we are going to get to an autobiography.
Schroeder clearly (but gently) exposes the flaws and genius in Buffett.
Buffett’s family have had their fair share of problems. For example, all of Buffett’s children have had failed marriages and all of them are college drop-outs, some members of his extended family have suffered from mental illness and there has even been the odd suicide in the family. Buffett himself engaged in shoplifting as a teenager.
This is no Brady Bunch family - as many other authors have portrayed it to be. Every family has its problems and the Buffetts are no different to anyone else.
Buffett does come out looking like a rather one dimensional character – obsessed with making money, with his only other interest seemingly being the card game Bridge. This is not really surprising – the vast majority of people who have achieved excellence in their chosen field are fanatical about it, you don’t get excellence any other way.
Buffett’s diet consists of coke, hamburgers, steaks, hash browns, peanuts, ice cream and popcorn (this of course has been well documented elsewhere). Most of these foods (if eaten continuously) are not exactly conducive to longevity and it’s even more surprising when one considers that Buffett has always been obsessed by his own mortality.
In 1989 Buffett was invited to dinner by Akio Morita, the chairman of Sony. Morita had his chefs serve sushi (many courses of it) and Buffett sent every course back without even having tried it. Buffett felt embarrassed about this but even then he could not bring himself to try some of it – this simple example shows an inflexibility that extends far beyond food.
When his sister Doris ended up owing a few million dollars in the wake of the 1987 stock market crash (she had been playing around with derivatives), Buffett refused to clear her debts. He did eventually help her out in a roundabout way, but in his position, I would have helped my sister – most people would have. Whether it was sushi or his sister, he was not prepared to bend his own rules.
He is a person who easily and quickly develops strong emotional attachments to certain people – the late Katherine Graham (no relation to Benjamin Graham), Charlie Munger, Bill Gates, Carol Loomis and Sharon Osberg to name a few. In fact, Buffett is more attached to some of these people than to certain members of his own family.
The whole Salomon debacle (Buffett invested $700m in the 1980s in this now long gone investment bank) occurred primarily because he liked Salomon’s John Gutfreund (they later fell out). Had Buffett known what he was getting into, he would never have touched Salomon.
Many other books do not mention (or gloss over) the failed investments that Buffett has made (there are not too many of them, but they do exist). Dexter Shoe is the most unfortunate investment Buffett has made (up to now).
The book has all sorts of little revelations in it, for example, who knew that Berkshire Hathaway shareholders have been known to steal from some of the stalls set up to promote Berkshire’s businesses at the annual meeting? Who knew that Bono (from U2) was a good friend of Buffett’s daughter Susan and was one of the few non-family members to attend Buffett’s (first) wife’s funeral?
As is normal for this type of book, lots of Buffett wannabes will scour it for some blinding investing insight that they can take away and use to great effect. For me, the best paragraph in the book concerning investing relates to Buffett’s purchase of more than $1 billion of Coca-Cola stock in the late 1980s:
“Buffett applied a margin of safety to his estimates. He did this simply by taking a whack at the number, rather than using some complicated model or formula. He used no computers or spreadsheets in doing any of these calculations; if the answer didn’t hit him over the head like a caveman’s club, in his view, the investment wasn’t worth making.”
No spreadsheets, no computers, no models, no secret formulas – just some basic arithmetic, some historical information and some good judgment – that’s it. It’s as close as you will get (or need to get) to what Buffett does.
Schroeder’s book is 969 pages long (with the index and notes) - it’s one of the largest books I have ever seen. However, it didn’t feel long because Schroeder held my attention all the way through – she has done a superb job. I highly recommend it to you.
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