Everyone has an association with the word and sound 'Buffett.' For fans of the TV sitcom, Friends, they'll instantly be reminded of one of the show's most popular and effervescent characters, Phoebe Buffay. For the more hungry among us, we'll think of continental breakfasts and all-you-can-eat holiday buffets. And for anyone in tune with the financial world, the name Buffett is typically associated with one man who has defined investing success throughout the years. In this book review, we're going to find out why...
In each industry or walk of life, there are only a couple of names that are synonymous with that field. Lionel Messi and Cristiano Ronaldo have dominated the footballing scene for the last fifteen years, and have surpassed almost every record set before them.
In ice-skating, Torvill and Dean are still the first two names that come to mind. Picasso and Van Gogh are almost interchangeable with the field of art. The same can be said about Warren Buffett and investing.
Buffett: The Making of an American Capitalist may have been written over 25 years ago by Roger Lowenstein, but the lessons are still as relevant today as they were in 1995. In the biography, we learn about Warren Buffett's upbringing, from his relatively modest upbringing in Omaha, to his Berkshire Hathaway empire. We are taken through each step of his life, learning about the relationships that he built along the way, as well as his investment strategy that made him so successful and renowned.
What is most striking is that, even at such a tender age, Buffett was intensely driven by the desire to make more and more money. It wasn't so he could buy luxuries for himself or his family and splash out on unnecessary indulgences like many billionaires do today. It was just how he was wired. From searching for golf balls on courses to sell, setting up pinball machines in barbershops, or scavaging for winning horse racing tickets that had been discarded at the race tracks, this desire to make money from a young age sets Buffett apart.
For Buffett, from childhood, numbers were of pivotal importance. His numerical abilities were unparalleled, and this helped him as he grew older, memorising each figure and detail from companies' annual reports, so that he could recite them at parties and social gatherings, much to the amazement of his contemporaries. His hero and mentor was Benjamin Graham, founder of value investing and the author of The Intelligent Investor (see our review of that book here), who taught Buffett the basics. Not long after, Buffett had outgrown his mentor and was making millions through his own trading strategy.
Lowenstein's book is an intriguing insight into Buffett's life, leaving no stone unturned. Every minute detail is captured, and interviews with those closest to Buffett allow us to step into the mind of the investing genius. Oxymorons and paradoxes are common in the book. A family man by nature, Buffett is emotionally unavailable and isolated, and insights from his three children show that he was more focused on creating a perfect portfolio and making millions in his study upstairs than he was on helping his children with their homework. A man who was once the second richest in the world, only topped by Bill Gates, Buffett is portrayed as an extremely frugal, sensitive character, who still lives in his same Omaha family home that he bought for only about $30,000 in the 1950s.
There are many lessons to be learned from the book. Buffett is clearly marked as a different breed of genius with a money-making obsession that stems from his childhood. His addiction to Pepsi-Cola adds a sense of humour to the novel. And the book also "shows how Buffett's investment strategy - a long-term philosophy grounded in buying stock in companies undervalued on the market and hanging on until their worth invariably surfaces - is a reflection of his inner self."
Finally, there is one unbelievable truth that encapsulates Buffett and is a testament to his success throughout the years. In the introduction of the book, we're told by the author that if one had invested $10,000 with Buffett when he began his career in 1956, it would have been worth $80 million by the end of 1994. What is startling is that, in the years since the publication of this book, that number has increased almost ten-fold. I read an article this week that questioned whether Warren Buffett, now 89 years old, has finally lost his touch, but upon reading this book, you quickly understand that this man is a genius, his strategy is timeless, and his success in beating the stock market, year after year, is unrivalled.
If you're looking for a fascinating insight into the life of the greatest investor of all time, you can (and should) buy an updated version of Buffett: The Making of an American Capitalist from Amazon here.