Title and Author: Buffett, The Making of an American Capitalist by Roger Lowenstein – Book Review
Synopsis of Content:
This superbly written pager turner is a biography of the enigmatic Warren Buffett from birth to 1995. It is not an “authorized” biography which has freed Lowenstein to write candidly about not only Buffett’s phenomenal success as an investor but also about his personal foibles.
From his middle class mid western rearing in Omaha, Nebraska the book takes you through all his major personal and business events. You see what formed this young boy who was born with a fascination for numbers and business and who began his entrepreneurial career at the age of 6 selling Chiclets gum. Having learned the basics about stock trading from his father he went on to study under the famous Benjamin Graham at Columbia. It is there that he learns the fundamentals of value investing and is warned away from technical or speculative investing.
In the early 1950s he strikes out on his own creating small partnerships of investors and continues a lifelong obsession with American business. His encyclopedic knowledge of US corporations is explained as well as his disciplined study of thousands of annual reports.
The book goes into fascinating detail about the acquisition and transformation of Berkshire Hathaway which ultimately becomes Buffett’s holding company. You read about his involvements with a major soft drink company, GEICO, and many other companies including newspapers, airlines and manufactures. You also meet the fascinating and ever growing group of friends, associates and colleagues that he meets and that form expand his influence and reputation. The chapter on his short time as CEO of Salomon Brothers and how he saved that firm is fascinating and enthralling.
Buffett’s investment performance has been unparalleled in American business. He has outperformed the stock market and any other investment portfolio. Remarkably he did it consistently for over four decades. Ultimately he became the richest man in the USA.
The book also chronicles his personal life, its ups and downs, his relationships and family and his friendships with notables such as Katherine Graham and of course his long time partner and alter ego Charlie Munger.
Despite incredible wealth and fame Buffett remains loyal to his home town in Nebraska where he continues to live and to the values and ethical standards he learned growing up. You will easily see why he has been compared to Mark Twain and Will Rogers for his homespun wisdom.
Readability/Writing Quality:
Extremely well written this is a page turner. Written almost like a novel the biography is engaging throughout.
Notes on Author:
Roger Lowenstein was a reporter for the Wall Street Journal, has authored five books and co-authored another, has written for many major periodicals and is director of his own investment fund.
Three Great Ideas You Can Use:
1. The only way to make money on Wall Street is to invest in value. Day trading and speculations about the direction the market is going is futile. Buffett demonstrated the value of clearly understanding the businesses you invest in.
2. Buffett’s genius, as it were, is described by the author as “largely a genius of character – of patience, discipline, and rationality.” This along with a lot of hard work is the bedrock of success including investment success.
3. Finding stocks that are high in value but under priced and investing for the long term in businesses that are well managed is a key component of long term success in the market.
Publication Information:
Buffett, The Making of an American Capitalist by Roger Lowenstein
Copyrighted by Roger Lowenstein in 1995. Published by Main Street Books, Doubleday.
Overall Rating for Book: Excellent
Writing Style: Engaging and easy to follow.
Usefulness: Very useful for anyone seeking to understand what works well in value investing.
