The Snowball tells the tale of a born financial wizard

The Snowball tells the tale of a born financial wizard
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First Published: Tue, Sep 30 2008. 01 11 AM IST

Young genius: Warren Buffett when he was two years old. He was an unusual child, obsessed with numerical calculation and?arcane research. NYT
Young genius: Warren Buffett when he was two years old. He was an unusual child, obsessed with numerical calculation and?arcane research. NYT
Updated: Tue, Sep 30 2008. 10 23 AM IST
In 1940, 10-year-old Warren Buffett was taken to New York as a birthday gift from his father. Some kids yearn to see the circus and the zoo. Little Buffett wanted to visit Wall Street.
Young genius: Warren Buffett when he was two years old. He was an unusual child, obsessed with numerical calculation and?arcane research. NYT
While at the New York Stock Exchange he managed to meet Sidney Weinberg, senior partner of the investment bank Goldman Sachs, and engage him in a conversation. At the end of their talk, Weinberg put his arm around the boy and asked, “What stock do you like, Warren?” People have been asking that question ever since.
Sixty-eight years later, Buffett is said by Forbes to be the richest man in the world (in the magazine’s annual ranking published in May. Bill Gates is the richest according to a recent ranking). He just announced a $5 billion investment in Goldman Sachs that should keep the company afloat and boost his own net worth.
And his opinions are so hotly sought that The Snowball: Warren Buffett and the Business of Life, a biography with which he has enthusiastically cooperated, would be of interest even if it answered only softball questions.It approaches him seriously, covers vast terrain and tells a fascinating story.
Buffett made a smart choice when he chose Alice Schroeder as his Boswell. Yes, he found an appreciative biographer with whom he seems to have a warm rapport. But he also found a writer able to keep pace with the wild swerves in the Buffett story and the intricacies of Buffett’s Berkshire Hathaway Inc. business empire.
Schroeder is as insightful about her subject’s precise anticipation of current financial crises as she is about his quirky personal story. And she is a clear explicator of fiscal issues.
This sprawling, colourful biography will mesmerize anyone interested in who Buffett is or how he got that way.
A photo of Buffett at age two shows him grinning cryptically while clutching a toy tightly to his chest. It goes without saying that he was an unusual child. He was obsessed with numerical calculation and arcane research. In church in Omaha, he would calculate and compare the life spans of those who composed hymns. In a Roman Catholic hospital after a bout of appendicitis, he collected the nuns’ fingerprints to save in case one ever committed a crime.
The biographer: Alice Schroeder. NYT
He began dreaming up moneymaking endeavours from the time he was 6, and he hoarded his earnings. (He held off on major philanthropy until late in his life, ostensibly for that reason). ?At 14, he made enough money delivering newspapers to file a $7 tax return. He deducted his watch and bicycle as business expenses.
Surely Buffett was the only student at his high school to own a tenant farm and earn more money than his teachers did. After that, “college was only going to slow me down”, he recalls. Nevertheless he attended Wharton business school at the University of Pennsylvania and was as notable for goofy pranks and slovenly habits as for precocity.
A turning point came when he was rejected by Harvard Business School and decided to attend Columbia. One professor there was Benjamin Graham, author of The Intelligent Investor. Graham became his mentor and role model. Exposed to Graham’s idea of security analysis, “Warren’s reaction was that of a man emerging from the cave in which he had been living all his life, blinking in the sunlight as he perceived reality for the first time”.
The superhuman tenacity that he brought to sniffing out undervalued companies also served him well in his personal life. Unable to win the interest of Susan Thompson, he chased her father instead; eventually, she became Susie Buffett. They had three children, to whom a distant yet manipulative Dad was “the disengaged, silent presence, feet up in his stringy bathrobe, eyes fixed on The Wall Street Journal at the breakfast table”.
But dad was putting his research to amazingly lucrative use. Only when Susie accidentally put dividend checks down an incinerator and scurried to retrieve them did she realize how much money her husband was making.
The Snowball (with a title that refers to Buffett’s way of making things get bigger and bigger) tracks his financial coups without becoming a string of “and then he bought” stories.
Part of the book’s liveliness comes from the feisty, penny-pinching characters with whom Buffett liked to lock horns. The book details his eyebrow-raising friendship with Katharine Graham of The Washington Post, an anomalous liaison since he claims that Daisy Mae of the “Li’l Abner” comics was his feminine ideal.
In any case, Buffett required a constant supply of hamburgers and motherly care. He surrounded himself with Susie, a surrogate wife (Astrid Menks, whom he later married) and a close circle of other women.
One of many priceless anecdotes here involves another female friend of Buffett’s who happened to stay in Graham’s guest room. When this friend called, shocked, to tell Buffett that there was a real Picasso in the bathroom, he replied that he had stayed in that guest room for years and never noticed it. What he noticed was that the bathroom contained free shampoo.
The Snowball features equally good stories about power players, including Akio Morita, a co-founder of Sony, and Bill Gates, whom Buffett instantly recognized as a soulmate. Schroeder reports in depth on Buffett’s reluctant involvement in the 1991 near-meltdown of Salomon Brothers with lessons on the risks of deregulation, the precariousness of derivatives and the dangers of involving government in bailing out financial institutions.
In shaping its definitive portrait of Buffett, The Snowball need not make excessive claims of his importance. With story after story, Schroeder makes that self-evident. “No group of shareholders in history,” she writes, “had ever missed their CEO as much as Berkshire’s shareholders would miss Buffett when he was finally gone.”
©2008/The New York Times
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First Published: Tue, Sep 30 2008. 01 11 AM IST