By William Patalon III
Executive Editor
Money Morning/The Money Map Report
There are scads of books on the market purporting to tell the story of investing guru Warren Buffett. I know, because during my days as a business journalist, I read - or at least perused - almost all of them. And as my lovely wife Robin will tell you, most of those now-dusty tomes still adorn my office shelves at home - along with all the other "research materials" left over from my 20 years as a journalist and author.
But we all know that time is a very precious commodity these days, so please allow me to save some of yours. If you really want to learn about Buffett, the man, and Buffett, the investor, there's really only one biography worth reading: "Buffett: The Making of an American Capitalist," by Roger Lowenstein, was first published in 1995, meaning it's been out on the market for more than a decade. And, yet, it remains the best Buffett biography out there, providing the most complete picture to date of the world's richest man, best-known as the sagely investor who has transformed Berkshire Hathaway Inc. (BRK.A, BRK.B) from a wheezing textiles firm into the world's greatest investment vehicle.
Please note, that when I refer to the "best Buffett book," I'm excluding such Buffett-penned works as "The Essays of Warren Buffett: Lessons for Corporate America." I'm also - by necessity - not including the new "authorized" biography, "The Snowball: Warren Buffett and the Business of Life," since that's not due on bookstore shelves until Sept. 29. "The Snowball" is a Bantam Dell Publishing Group book.
But I looked at pretty much everything else available, looking for the one book that captured the personal life, the personality and the investment wisdom of the man folks refer to as the "Oracle of Omaha." Indeed, many consider Buffett to be the single-greatest investor of our times.
By William Patalon III
Executive Editor
Money Morning/The Money Map Report
There are scads of books on the market purporting to tell the story of investing guru Warren Buffett. I know, because during my days as a business journalist, I read - or at least perused - almost all of them. And as my lovely wife Robin will tell you, most of those now-dusty tomes still adorn my office shelves at home - along with all the other "research materials" left over from my 20 years as a journalist and author.
But we all know that time is a very precious commodity these days, so please allow me to save some of yours. If you really want to learn about Buffett, the man, and Buffett, the investor, there's really only one biography worth reading: "Buffett: The Making of an American Capitalist," by Roger Lowenstein, was first published in 1995, meaning it's been out on the market for more than a decade. And, yet, it remains the best Buffett biography out there, providing the most complete picture to date of the world's richest man, best-known as the sagely investor who has transformed Berkshire Hathaway Inc. (BRK.A, BRK.B) from a wheezing textiles firm into the world's greatest investment vehicle.
Please note, that when I refer to the "best Buffett book," I'm excluding such Buffett-penned works as "The Essays of Warren Buffett: Lessons for Corporate America." I'm also - by necessity - not including the new "authorized" biography, "The Snowball: Warren Buffett and the Business of Life," since that's not due on bookstore shelves until Sept. 29. "The Snowball" is a Bantam Dell Publishing Group book.
But I looked at pretty much everything else available, looking for the one book that captured the personal life, the personality and the investment wisdom of the man folks refer to as the "Oracle of Omaha." Indeed, many consider Buffett to be the single-greatest investor of our times.
Strong From the Outset
So many biographies - especially those of business luminaries - highlight their achievements, but go no further, never breaching the façade to show us just what makes the person tick. It's there, I believe, that Lowenstein excels, thereby setting his book apart from all the others.
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For instance, "American Capitalist" talks about Buffett's youth, and his introduction to business in the form of his grandfather's old-fashioned neighborhood grocery store, with its interesting smells, bare-board floors, and the wheeled ladder that clerks could slide along the shelves to reach items stored high overhead. And Lowenstein also writes about Buffett's terrible homesickness for his hometown of Omaha when his father Howard - who Warren proclaimed his lifelong "best friend" - is elected to Congress, a development that forced the family to leave Nebraska for a new home "Inside the Beltway." |
Both of those experiences influenced Buffett in a profound way, and those influences continue to manifest themselves even today.
For instance:
- His work in the family-run grocery store experience imbued Buffett with a lifelong affinity for companies with easy-to-understand business models - particularly businesses that actually make or sell a tangible product (the easier to understand, the better Buffett likes it). If the companies are family run, or have had the entrepreneur/founder at the helm for years and years, all the better, Buffett believes.
- And that bout of homesickness helped create in Buffett a deep-seated aversion to change.
Taken in tandem, Lowenstein believes those two qualities are a key reason that Buffett likes to invest in the businesses that he does - and to do so as a "partner," a kind of long-term owner - but without interfering with the existing management team, so long as the corporate officers achieve the promised objectives in such areas as "return on invested capital."
Building Berkshire
Buffett's seemingly homespun investment ideals have generated unparalleled financial results, and that confidence and independence instilled tremendous loyalty in the top managers of the companies he's invested in or bought outright - and that was true even before Buffett made a lot of those folks rich.
Indeed, Lowenstein jokes that only once did the former-proprietor/now-manager of a Buffett-acquired company subsequently turn on the Sage of Omaha. That was Rose Blumkin - known around Omaha as "Mrs. B." - the semi-tyrannical owner-operator of Nebraska Furniture Mart, which Buffett bought for an estimated $60 million in 1983. The business was a huge moneymaker for Berkshire. But in 1989, after a tiff with several of her grandsons over the management of the business, she quit in a huff and started a rivaling company - next door. At the time, Mrs. B. was 95.
Lowenstein's research into how the Berkshire Hathaway investment vehicle came by its name - with an investment in, and ultimate purchase of, a Massachusetts textiles firm - is particularly interesting. And it illustrates Buffett's personal makeup as well as his business acumen. He bought the company as a typical "Graham-and-Dodd" bargain stock, and then milked it for cash flow, which he used to diversify into insurance, retailing and other businesses. He ran the mill as long as possible, and with some sadness, eventually had to shut it down and have its milling machinery sold off or scrapped.
But when he first bought the business, and found that old directors minutes and old annual reports were available, he had them shipped back to Omaha, where he read and reviewed them with reverence.
The rest is essentially history, but I guarantee that you'll discover many new and interesting things about America's greatest investor by reading this book. Just as important, you'll pick up some fascinating and highly useful investing insights.
The "Authorized" Buffett Biography
The new book, "The Snowball," is reportedly a 976-page book that was written by former Morgan Stanley insurance analyst Alice D. Schroeder. Schroeder first met Buffett while working as an analyst, and covered Berkshire Hathaway, Reuters reported.
Bantam Dell said that Schroeder has spent "thousands of hours" with Buffett, talking about his life and career, and was able to obtain unparalleled access to both his business files and his friends. The title stems from a comment that Buffett reportedly made, in which he stated that "life is like a snowball. The really important thing is finding wet snow and a really long hill."
The book originally was to have been released in May, in conjunction with Berkshire's annual stockholders meeting, but was delayed for reasons that weren't immediately clear.
In 43 years, Buffett has transformed the Omaha-based Berkshire into a conglomerate that controls about 80 companies and that has a market value of roughly $180 billion.
Back in March, Forbes magazine anointed Buffett as the world's richest person, worth about $62 billion. Buffett is giving away most of his wealth to the Bill & Melinda Gates Foundation and four family charities, according to Reuters.
[Editor's Note: Because of the length of time that's elapsed since this book was published, it can be difficult to find. However, if your local bookseller can't find it for you, just ask your local library to get you a copy. With their agreements, if they don't have a book in their collection, they can often borrow it from another library system that has it. Trust me when I tell you that it will be well worth the effort. For a related story about Buffett's investment vehicle, Berkshire Hathaway, click here to check out the newest installment of our "Buy, Sell or Hold" feature - which appears elsewhere in today's issue of Money Morning.]
Related News and Story Links:
- Money Morning Investing Strategies:
The Three Simple Secrets to Global Investing Profits.
- Money Morning Investing Strategies:
Jimmy Rogers and Me: The Latest Wisdom From a Global Investing Guru.
- Book Recommendation:
Buffett: The Making of an American Capitalist (Hardback), by Roger Lowenstein.
- Book Recommendation:
The Essays of Warren Buffett: Lessons for Corporate America (Paperback), by Warren E. Buffett.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.