Contrarian tycoon
T. R. RAJAN
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Biography of the legendary investor who is known as the Oracle of Omaha
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THE SNOWBALL — Warren Buffett and the Business of Life: Alice Schroeder; Bloomsbury, London, Penguin Books, 11, Community Centre, Panchsheel Park. New Delhi-110017. Rs. 995.
It was Warren Buffett who foresaw the Dot-com bust in the 1990s. Again it was Buffett who warned the world against the use of derivatives, calling them “financial weapons of mass destruction.” The world of international finance looks upon him in justifiable awe as the “Oracle of Omaha”, and each year scours his annual report for investment tips, which many believe could turn them into millionaires, if not billionaires. The Snowball is his authorised biography and the author, Alice Schroeder, is a certified public accountant (CPA), and formerly a managing director at Morgan Stanley in their equities division, who left her career of following stocks to follow Buffett for more than five years.
Typical biography
The book opens with Buffett’s disarming admonition to the author: “Whenever my version is different from somebody else’s, Alice, use the less flattering version.” Then, much like a typical American biography, the book goes on with a dramatic description of a “by invitation only” conclave of the rich and famous organised by Herbert Allen in July 1999 in the Sun Valley, Idaho resort, where Buffett was a key speaker. Many in his audience were the Silicon Valley tech-rich who had felt that the Guru had missed the Dot-com bus (this in 1999 at the height of the Dot-com boom). He shares with them his basic description of the stock market: “In the short run, the market is a voting machine. In the long run, it is a weighing machine. Weight counts eventually. But votes count in the short run. And it is a very undemocratic way of voting. Unfortunately, they have no literacy tests in terms of voting qualifications.”
The book is divided into six parts. Except the first, they more or less follow a chronological order though telescoping into each other. The parts and the chapters have arresting titles such as “The Racetrack”, “Claim Checks”, “Warren, What is Wrong?”, “Thumb-Sucking and Hollow-Cheeked Results” and each of them has fascinating anecdotes from his life, both public and private, as well as nuggets of wisdom from the author’s interviews with him or people close to him or from his speeches.
Conservatism
However, the author does not explain adequately why Buffett strikes a chord in a way that other celebrity Chief Executive Officers (CEOs) do not. That here is a person who is the world’s richest or second richest person (depending on when one did the counting) starting from next-to-nothing and then has now given away almost all his wealth to charity, that too a charity which does not bear his name; a person who has been living in the same house he bought for $31,500 in 1958, drives around in an old car, which seem to endear him to even persons with less capitalistic inclinations. During an era when at the World Economic Forum, attendees cackle about globalisation, eyeballs, or structured investments, Buffett has been a contrarian who has spoken about the responsibility of the wealthy to society. He has protested against Republican efforts to eliminate the estate tax, and spoken out against a tax system that is unfairly skewed to benefit the ultra-wealthy. “All along, I’ve felt that the money was just claim checks that should go back into society,” he says in The Snowball. While other CEOs have been putting shareholders’ money at risk to chasing the latest fad and awarding themselves huge pay packets and golden parachutes even when they lead their companies to total ruin, Buffett has espoused sensible conservatism. Recall, for example, his opposition to stock options at a time when the Silicon Valley has been insisting they were essential to running a tech company.
Exhaustive
The book takes an exhaustive look at Buffett’s life and career but it is often exhausting. The tome is almost a thousand pages long, of which notes and index alone account for about 200 pages. There are too many minutiae of his life that probably would interest only a Buffett-obsessed voyeur! At many a place in the book one gets the feeling that the editor had dozed off and allowed in a mix of cloying sentiments, irrelevant details, and a perceptive observation or two. That said it has to be conceded that Schroeder has done a remarkable job of painting a nearly full picture of Buffett by getting him to open up in a way that few others would.
With the iconic Buffett as subject and a highly qualified Schroeder as his Boswell, one cannot be faulted for expecting a heady exquisite cocktail, shaken or stirred. I must confess I was neither shaken nor stirred. I tend to agree with the Economist reviewer who remarks that “those who wish to know more (about Buffett) may read this book. But Mr. Buffett’s collected essays and annual reports would be a better place to start.” For investors, it will take more than a few patient readings to tease out his many pearls of investment wisdom in this book.
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