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Buffett, The Making of An American Capitalist (Paperback)
by Roger Lowenstein
| Category:
Investing, Value investing, Stock market, Investment |
| Market price: ¥ 218.00
MSL price:
¥ 168.00
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 Good for Gifts |
| MSL Pointer Review:
A truly masterly job, this book stands out as the most recommended biography of Warren Buffett. |
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Author: Roger Lowenstein
Publisher: Main Street Books
Pub. in: April, 2008
ISBN: 0812979273
Pages: 496
Measurements: 8.3 x 5.6 x 1.4 inches
Origin of product: USA
Order code: BA00119
Other information: 978-0812979275
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- Awards & Credential -
The #1 National Bestseller (in North America) |
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- MSL Picks -
Buffett: The Making of an American Capitalist is a meticulously researched document on the life and times of Warren Buffett. The book starts from his childhood and progresses all the way through to his bailout of Salomon Brothers in the early 90's. The book receives no input from Buffett himself, so all the details are carefully crafted through hours of research and interviews with friends and families.
What emerges is a remarkably detailed and incredibly entertaining look at the life of Buffett. Lowenstein carefully weaves personal stories with investment philosophy to construct a complete picture of Buffett as both a man and as one of the greatest investors of our time. Buffett is portrayed as a man with incredible insight and great strength of character yet he is still afflicted with many of the foibles that besiege mere mortals such as ourselves.
Target readers:
Buffett fans, investors, MBAs, and anyone else who is interested in stock investing.
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- Better with -
Better with
The Essays for Warren Buffett: Lessons for Corporate America
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Roger Lowenstein, a financial journalist, reported for the Wall Street Journal for more than a decade, including two years writing its Heard on the Street column, 1989 to 1991.
He has written for many other publications, including Smart Money, The New York Times and The New Republic.
Lowenstein has written three books, Buffett: The Making of an American Capitalist (1995), When Genius Failed: The Rise and Fall of Long-Term Capital Management (2000), and Origins of the Crash (2004).
Since May 2005 he has been a contributing blogger at The Huffington Post.
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From Publisher
By picking the right stocks and businesses to invest in, plainspoken Nebraskan Warren Buffett became the richest man in the U.S. In this excellent biography, Wall Street Journal reporter Lowenstein details the billionaire stock market wizard's strategy of betting on the long-term growth of a handful of successful companies such as American Express and Berkshire Hathaway. Providing personal glimpses of a very private man, Lowenstein unearths childhood traumas such as the tormenting rages of Buffett's mother and his forced relocation to Washington, D.C., in 1943, where, at 13, he ran away from home (he was found by the police the next day). Buffett's wife, Susan Thompson, a nightclub singer, walked out on him in 1977 and was quickly replaced by his mistress, Latvian-born Astrid Menks. Lowenstein profiles an emotionally guarded, "strangely stunted" Midas obsessed with work and secrecy, who seemingly derives little pleasure from his fabulous wealth. Photos not seen by PW. Author tour.
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Introduction
In the annals of investing, Warren Buffett stands alone. Starting from scratch, simply by picking stocks and companies for investment, Buffett amassed one of the epochal fortunes of the twentieth century. Over a period of four decades - more than enough to iron out the effects of fortuitous rolls of the dice - Buffett outperformed the stock market, by a stunning margin and without taking undue risks or suffering a single losing year. This is a feat that market savants, Main Street brokers, and academic scholars had long proclaimed to be impossible. By virtue of this steady, superior compounding, Buffett acquired a magical-seeming net worth of $15 billion, and counting.
Buffett did this in markets bullish and bearish and through economies fat and lean, from the Eisenhower years to Bill Clinton, from the 1950s to the 1990s, from saddles shoes and Vietnam to junk bonds and the information age. Over the broad sweep of postwar America, as the major stock averages advanced by 11% or so a year, Buffett racked up a compounded annual gain of 29.2%.
The uniqueness of this achievement is more significant in that it was the fruit of the old-fashioned, long-term investing. Wall Street’s modern financiers got rich by exploiting their control of the public’s money: their essential trick was to take in - and sell out - the public at opportune moments. Buffet shunned this game, as well as the more venal excesses for which Wall Street is deservedly famous. In effect, he rediscovered the art of pure capitalism - a cold-blooded sport, but a fair one.
The public shareholders who invested with Buffett also got rich, and in exactly the same proportion to their capital that Buffett did. The numbers themselves are almost inconceivable. If one had invested $10,000 when Buffett began his career, working out of his study in Omaha in 1956, and had stuck with him throughout, one would have had an investment at the end of 1995 worth of $125 million.
And yet, the numbers alone do not account for the aura that Buffett cast on Wall Street. Once a year, disciples and money men would flock to Omaha like pilgrims on a hajj, to hear Buffett deconstruct the intricacies of investing, business, and finance. His annual meetings became a piece of Americana, like Elvis concert or a religious revival. Financial groupies arrived in Ohama clutching Buffett’s writings like a Bible and reciting his aphorisms like excerpts from the Sermon on the Mount.
His grasp of simple verities gave rise to a drama that would recur throughout his life. Long before those pilgrimages to Omaha, long before Buffett had a record, he would stand in the corner at college parties, baby-faced and bright-eyed, holding forth on the universe as a dozen or two of his older, drunken fraternity brothers crowded around. A few years later, when these friends had metamorphosed into young associates starting out on Wall Street, the ritual was the same. Buffet, the youngest of the group, would plop himself in a big, broad club chair and expound on finance while the others sat at his feat.
On Wall Street, his homespun manner made him a cult figure. Where finance was forbiddingly complex, Buffett could explain it like a general-store clerk discussing the weather. He never forgot that underneath each stock and bond, no matter how arcane (mysterious, MSL), there lay a tangible, ordinary business. Beneath the jargon of Wall Street, he seemed to unearth a street from small-town America.
It is a curious irony that as more Americans acquired an interest in investing, Wall Street became more complex, more abstruse (obscure, MSL), more arcane, and more forbidding than ever. Warren Buffett was born, in the midst of the Depression, the few Americans who did have capital felt personally equipped to manage it. This they did by salting it away in blue chips and triple-A bonds. The Depression cast a long shadow, but the postwar prosperity eclipsed. Today, tens of millions have at least a small grubstake, but very few feel comfortable with handling it, and fewer still have the old habit of prudence. At best, they anxiously scan the financial pages, as though each day’s twitch in the data on housing or inflation might bring the long-awaited “answer.” At worst, they switch in and out of mutual funds with an impatience that would have shocked their grandparents.
In such a complex age, what was stunning about Buffett was his applicability. Most of what Buffett did was imitable by the average person (this is why the multitudes flocked to Omaha). Buffett’s genius was largely a genius of character – of patience, discipline, and rationality. These were common enough virtues, but they were rare in the heat of financial passions, and indispensable to anyone who would test his mettle in the stock market. In this sense, Buffett’s character and career unfolded as a sort of public tutorial on investing and on American business. Buffet was aware of his role from the very beginning, and he nurtured a curious habit of chronicling his escapades even as he lived them.
As an investor, Buffett eschewed the use of leverage, futures, dynamic hedging, modern analysis, and all of the esoteric strategies developed by academics. Unlike the modern portfolio manager, whose mind-set is that of a trader, Buffett risks his capital on the long-term growth of a few select businesses. In this, he resembled the magnates of a previous age, such as J. P. Morgan.
But the secretive Morgan was a Wall Street archetype; Buffett, a plainspoken Midwestner, was its antithesis. He was famous for quipping that it was the bankers “who should have been wearing the ski masks,” or that, as he said to a friend who had been offered a job in finance, “you won’t encounter much traffic taking the high road in Wall Street.” 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. This commonsensical cracker-barrel wit made him an archetype of some larger, and far more basic, to the country’s past. It answered to a deeply American need for authentic heroes.
This has always been America’s secular myth: the uncorrupted commoner from the Midwest or West who stands up to the venal Easterners, be they politicians, bankers, big businessmen, or other. It is a ransom to the country’s origins, a remembrance that the first authentic and pure Americans were destroyed. Let Europe have its princes; the American ideal has always been a self-made man from the midcountry – a Lincoln, a Twain, a Will Rogers. In an age without heroes, this, too, is what Buffett’s disciples were seeking in Omaha.
As Jack Newfield wrote of Robert Kennedy, Buffett was not a hero, only a hope; not a myth, only a man. Despite his broad wit, he was strangely stunted. When he went to Paris, his only reaction was that he had no interest in sight-seeing and that the food was better in Omaha. His talent sprang from his unrivaled independence of mind and ability to focus on his work and shut out the world, yet those same qualities exacted a toll. Once, when Buffett was visiting the publisher Katharine Graham on Matha’s Vineyard, a friend remarked on the beauty of the sunset. Buffet replied that he hadn’t focused on it, as though it were necessary for him to exert a deliberate act of concentration to “focus” on a sunset. Even at his California beachfront vacation home, Buffett would work every day for weeks and not go near the water.
Like other prodigies, he paid a price. Having been raised in a home with more than its share of demons, he lived within an emotional fortress. The few people who shared his office had no knowledge of the inner man, even after decades. Even his children could scarcely recall a time when he broke through his surface calm and showed some feeling.
Though part of him is a showman or preacher, he is essentially a private person. Peter Lynch, the mutual-fund wizard, visited Buffett in the 1980s and was struck by the tranquility in his inner sanctum. His archives, neatly alphabetized in metal filing cabinets, booked as files had in another era. He had no armies of traders, no rows of electronic screens, as Lynch did. Buffett had no price charts, no computer – only a newspaper clipping from 1929 and an antique ticker under a glass dome. The two of them paced the floor, recounting their storied histories, what they had bought, what they had sold. Where Lynch had kicked out his loers every few weeks, Buffett had owned mostly the same few stocks for years and years. Lynch felt a pang, as though he had traveled back in time.
Buffet’s one concession to modernity is a private jet. Otherwise, he derives little pleasure from spending his fabulous wealth. He had no art collection or snazzy car, and he has never lost his taste for hamburgers. He lives in a commonplace house on a tree-lined block, on the same street where he works. His consuming passion - and pleasure - is his work, or, as he calls it, his canvas. It is there that he revealed the secrets of his trade, and left a self-portrait.
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Publisher Weekly (MSL quote), USA
<2006-12-27 00:00>
By picking the right stocks and businesses to invest in, plainspoken Nebraskan Warren Buffett became the richest man in the U.S. In this excellent biography, Wall Street Journal reporter Lowenstein details the billionaire stock market wizard's strategy of betting on the long-term growth of a handful of successful companies such as American Express and Berkshire Hathaway. Providing personal glimpses of a very private man, Lowenstein unearths childhood traumas such as the tormenting rages of Buffett's mother and his forced relocation to Washington, D.C., in 1943, where, at 13, he ran away from home (he was found by the police the next day). Buffett's wife, Susan Thompson, a nightclub singer, walked out on him in 1977 and was quickly replaced by his mistress, Latvian-born Astrid Menks. Lowenstein profiles an emotionally guarded, "strangely stunted'' Midas obsessed with work and secrecy, who seemingly derives little pleasure from his fabulous wealth. |
Linsay (MSL quote), USA
<2006-12-27 00:00>
I had to read a book for a college class I was taking about leadership or teamwork. After much research of finding a book that would be of interest to me and teach me about life in general, I was recommend to read this book. At first I thought this book would not be what I was looking for but just tips on how to make money. But much to my dismay, I found this book to be a great guide to becoming a success person in the business world as well as personally.
This is a great book that will not teach you how to become a great investor but more importantly what kind of character Warren Buffett was and how his personality traits helped him become one of the greatest businessman and investors. This book was not dry like most autobiographies entail; instead it was anything but that. It had a deep understanding on different aspects of Buffett's life that helped him become the man he is today. It taught many strategies to becoming a good leader and more importantly a team player. Roger Lowenstein also showed great emphasis on Buffett's childhood and how he was able to think future success to show that he wanted to become successful and have great amounts of wealth. He showed that Buffett was a great man that made morally, ethical decisions to become one of the best investors of all time. I definitely recommend this book for anyone who has an interest in Warren Buffett's life. This book is a life long lesson.
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Rob Ryan (MSL quote), USA
<2006-12-27 00:00>
Buffett would never describe himself as spiritual, and he has all the hallmarks of a wise man: common sense, immense confidence in himself, supportive relationships that last a lifetime, the willingness to work hard without complaint, an extraordinary low key way of being a valued and trusted friend to the world's mightiest and wealthiest players. I learned a lot about success in business and life reading his story.
The author does a great job of recounting important conversations and revealing remarks that afford insight into this extraordinary man's mind. Buffett's life is all about value: the value of companies, and his own personal values which have served him so well. This is a book well worth reading.
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Kevin Kingston (MSL quote), USA
<2006-12-27 00:00>
$10k to $125 million in 39 years. That's the return an investor would have if they invested with Buffett at the beginning of his career in 1956 and held until the end of 1995. In 2006 it would be more like $250 million +. Buffett is a patient, disciplined and extremely rational investor who says his favorite holding period is "forever" and 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.
Warren made the comment while still young that he would be a millionaire by the age of thirty or he would jump off the tallest building in Omaha. Throughout his career, even though he had a burning desire to be extreme- ly wealthy he never forgot concepts that were instilled in him from his father and grandfather, such as the belief that your credit and your word is far better than money.
In 1945 while only 14 he was earning $175 a month from his paper route (just under $2,000 in today's dollars) and took the profit and bought 40 acres of Nebraska farmland. By the time he graduated high school he was involved in three businesses and had read over 100 books on business.
By 1956 he had turned his $9,800 savings into $140,000. He left his mentor / idol, Ben Graham and his White Plains NY apartment and headed back to Omaha. By 1957 he set up shop and was running $300,000. By 1964 he was managing $22 million and his personal net worth was approaching $4 million and by the time he was 35 years old in 1966 he managed $44 million and was worth $6.8 million.
In 1967 he was 37 years old, worth $10 million and managing $65 million. In 1968 the Buffett partnership had a gain of $40 million or 59% and he was managing $104 million. By 1970 when he wound up the partnership because he felt the market was nuts (extremely overvalued) an investor that started with him in 1957 would have had a compounded annual return of 29.5% compared with 7.4% for the Dow. For those investors that were wise or lucky enough to stay with him by taking their shares in Berkshire Hathaway instead of cashing out the ride was just getting started.
The wisdom packed into this book is priceless, event though its not earth shattering or revolutionary. The ideas are things we have all probably heard before, its just that Warren lived them. Maybe its best describes by Warren's partner Charlie Munger in his recent book, Poor Charlie's Almanak where he describes his decision making process as running an idea through a hundred or so mental disciplines or beliefs before deciding whether to act on it. For example Buffett tells his son one day, "It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you'll do things differently."
A few great quotes worth remembering:
"With enough inside information and a million dollars you can go broke in a year"
When asked how he does it, Buffett replies, "By reading a couple thousand financial statements a year"
What counted to Buffett was, "Profit as a percentage of capital invested" he said, "I'd rather have a $10 million business making 15% than a $100 million business making 5%, I have other places I can put the money"
In 1970 with the dissolution of Buffett Partnership, Buffett personally became the owner of 29% of Berkshire's stock and for the first time composed the letters to shareholders. Which I highly recommend reading, as this was Buffett's stage throughout the years to preach his view on investing.
During a Q&A for GEICO executives Buffett said, "An investor should approach the stock market as if he had a lifetime punch card. Every time he bought a stock he punched a hole. When the card had 20 holes he was done-no more investing for life. Obviously the investor would filter out every idea but the best."
In an essay for Forbes in 1979 after a prolonged bear market, and after Business Week ran the celebrated cover story, "The Death of Equities" Buffett said, "The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long term values."
Interestingly when a friend suggested that Buffett try his hand at real estate, Buffett grinned. "Why should I buy real estate when the stock market is so easy?"
Probably the most memorable and important quote, especially for business owners is on page 245:
"Regardless of price, we have no interest at all in selling any good businesses that Berkshire owns, and are very reluctant to sell sub-par businesses as long as we expect them to generate at least some cash..."
I think I'm going to hang that up in my office under a printout of Berkshire's annual performance. |
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