Snowball- Life & Times of Warren Buffett, the Money Machine

(This review was written in Feb 2009)
The name ‘Warren Buffett’ stirs a wide range of emotions in people. From envy to disgust to pity! I have seen the entire range. The only thing common is that the name also seems to evoke one common word that each one associates with the name.. WEALTH.

“Snowball” is the ‘authorised’ biography of Warren Buffett, written by Alice Schroeder, an investment analyst. The book is a big boring read, spanning across more than 70 years of WB’s life almost in a chronicle like fashion. Unless you are a big fan of WB, it is unlikely that you will ever be able to finish the book in your lifetime, unless you are stuck with writing a review on the book. The author has a style of using more words where few would do. You wish that the book were about one third the actual size it is.

After you read the book, you do not know whether to like the man or hate him with a passion. To this extent, the author has done a splendid job by not taking sides and trying to present facts (of course as narrated by WB and his circle of contacts) without any bias. After reading the book, the picture that emerges is of a pitiable man, who has spent his entire life accumulating wealth for wealth’s sake. The end result is that you see a pitiable man, who lost all touch with human beings and identified only with Benjamin Franklin who grinned back at him from the greenback. The feeling one gets after reading the book is that if you have an obsession for money, then do not ever get married and do not have any relatives or friends. Once you make them, you will have your choices.

A man who spent near over seven decades accumulating wealth, without ever putting it to any use and hoarding it to the point of denying family members any pleasures of the unearned wealth, finally perhaps saw the pointlessness of wealth accumulation and has decided to give it all to charity!!

He lived in an era where compliance was lax and inside information were within the purview of law. However, the fact is that the same window was open to everyone else. He alone made the wealth that he did. Whilst one does not dispute his money making abilities, surely in today’s environment, it is going to be virtually impossible to replicate his success. There is also some speculation as to whether the compound gains in the future are going to be anywhere as spectacular.

One important lesson to be learnt from the life of WB is that if you want to invest money in to stocks, do it with money that is “spare” and will never ask any questions. And to make serious money, it is not enough to buy a few hundred shares. You have to own decent chunks of a business. And find them with the right people, trust them and let them manage the business. And do not invest in financial services business. WB has obviously missed the bus on Salomon Brothers since management in such companies is typically focused on own greed rather than shareholder gains. No wonder he has taken a very cautious step on Goldman Sachs.

The biography is unfortunately silent on the scandal of his insurance company that got entangled with ethical issues in the AIG affair. To that extent, the writer is less than honest in terms of purpose. The book also chronicles virtually every one of his ‘deals’ or investments. The author skips most of the uncomfortable issues, whether it is the matter of WB ditching his wife for someone else or his ignoring every one in life unless it meant making money. There is also no comment about his younger days shoplifting or gambling habits.

The final act of giving away his fortune to be managed by someone else, is one that could perhaps have done with some more explanation and analysis. What comes home is the point that charity is serious business and that it needs a focus that is equal to one that is needed for making money. This one act of giving, to me, is the ultimate act of courage by an extraordinary man. I do hope that people pick up this lesson and we become a nation of ‘givers’ rather than accumulators. And it is best to keep the giving to the family members a ‘token’ affair. That is what has made America a great nation. The habit of the Indians to leave behind everything for their children is what makes India a small nation with many people in the Forbes list and also the highest number living in poverty.