Monday, December 15, 2008

Book Review: The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

For those looking for a guide to how Warren Buffett picks stocks, The Snowball: Warren Buffett and the Business of Life by Alice Schroeder will be an initial disappointment.

It is not a "how Warren Buffett pick stocks" book. It is a near-full biography of Buffett (I will explain why I say near, rather than full, in a moment). If you want to learn about seemingly everyone Buffett has come in contact with over his lifetime (including mini-biographies of these people). This is the book. You will learn, for example, about Rose Bumpkin's journey from Russia to America.

You will learn that at one point Buffett was juggling four women in his life, his wife Susie, who was living in San Francisco, his live-in Astrid, Kay Graham of the Washington Post and bridge champion Sharon Osberg. Possibly sleeping with all of them. Schroeder does leave that to your imagination.

You will learn that Buffett is a wimpy kind of guy, who hates personal confrontation, but somehow ends up firing people throughout his career.You will learn that Buffett was much more involved in many companies than the general impression he gives of being hands-off, but that at other times he has been very much hands off.

When John Gutfreund was replaced at Salomon Brothers during the height of the Treasury Bond scandal, Buffett's approach to notifying the new CEO at Salomom was unique. The new CEO would be Deryck Maughan. Buffett called Maughan away from a group that had been waiting on the trading floor to hear news of what was going to happen. He pulled Maughan into an elevator and said to him, "You've been tagged". And then with no further conversation, he took Muaghan down the escalator into a press conference. Following the press conference, Maughan asked Buffett if there was any particular direction he wanted to take the firm and Buffett responded with a "No", and then Buffett hopped into a taxi.

As for investors, and those who want to learn more about how Buffett operates from an investment perspective, there are plenty of nuggets of fascinating new information, but you are going to have to pick those out from the massive amounts of detail about other aspects of Buffett's life. But for the serious investor, I think it is very much worth the effort, though effort it will be.

One chapter that is titled, Winter, I recommend skipping, unless you are into minute details of the surgeries and radiation that Buffet's wife Susie had to go through to battle her cancer. As with everything else in the book, it is detailed. You will learn in detail about the tube that was inserted down her nose, about the fact that she would possibly lose all of her taste buds, that doctors marked on her arm where they would take parts to replace sections of her mouth that they were removing. You will learn how the tube gets clogged up, the color of the goo etc. It's a chapter full of this kind of detail. If there were any investment tips in the second half of this chapter I missed them, since I am not into such gory details and skipped the second half of the chapter.

As for why, with so much detail, I write that this is a near full biography and not complete, I think Schroeder pulled her punch in at least one situation. There was a deal that went down where Buffett spent x millions to buy a company from a friend of Buffett's and Buffett's partner Charlie Munger that saved the friend's butt big time.

Indeed, one book about Buffett, that I'm guessing I probably read it about ten years ago (and I can't seem to find which one) suggested that Buffett spent the millions on the purchase even though the business wasn't worth it, just to bail the friend out.

In Schroeder's book that carries so much detail that we learn the color of the goo that was in the tube of Buffett's wife's nose, the fact that this deal isn't even mentioned is odd, to say the least. Punch pulled? I think so.

That said, Schroeder has done a Herculean job of painting a near-full picture of Buffett. It is an incredibly thorough biography. She clearly was able to get Buffett to open up in a way that few people would. I'm sure Buffett has to be thinking now, "Why did I tell her all that?"

It has to be ranked, as a biography, as one of the best biographies ever written. For investors, it will take a reading or two times (at least)to find Buffett's many pearls of investment wisdom contained in this book. I generally don't read with a highlighter, but for investors, this is certainly something you would want to do with this book, so that you can highlight, for review, the investment book within the complete biography.

6 comments:

  1. Curious - what deal was this?
    "There was a deal that went down where Buffett spent x millions to buy a company from a friend of Buffett's and Buffett's partner Charlie Munger that saved the friend's butt big time."

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  2. Hi Lauren,

    I'm traveling so I don't have access to my library.

    I went to the San Francisco library, but I have a larger selection of Buffett books than SFPL.

    I'm pretty sure I remember who the deal was done with, but as I said I read it more than 10 years ago. So given the nature of the charge, I want to make sure I get the name correct before I post it. I'll be home in roughly a week, and will update then.

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  3. Hi Lauren,

    I'm traveling so I don't have access to my library.

    I went to the San Francisco library, but I have a larger selection of Buffett books than SFPL.

    I'm pretty sure I remember who the deal was done with, and the book where it was written up, but as I said I read it more than 10 years ago. So given the nature of the charge, I want to make sure I get the facts correct before I post it. I'll be home in roughly a week, and will update then.

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  4. any luck on finding out the details of this deals? still curious. thanks!

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  5. Hi Lauren,

    I am actually still traveling, but will be home this coming weekend. I should have something for you by next Monday.

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  6. Hi Lauren,

    I'm back with my books in DC, unfortunately I thought I would be able to find the reference quickly. Not so. Which means I am going to have to do some closer reading.

    Try back in another week, hopefully I'll have something for you by then.

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