The Snowball: Warren Buffett and the Business of Life, is one of the latest books on the investor-financier, written by the Wall Street Journal’s Alice Schroeder.
It’s an odd title for a biography, but apparently an analogy to the accumulation of compound interest in that rolling a snow ball makes it bigger. It was published last fall, at the end of 2008.
The book begins in 1999 at a conference in Sun Valley, Idaho. Readers first meet Buffett at retirement age and get the highlights of his conference presentation, where he confronts the audience at the height of the dot com stock boom, but with some financial ideas they do not want to hear.
Buffett cautions the audience to be careful in their investing and their expectations. “I will be talking about pricing stocks, but I will not be talking about their course of action next month or next year. Valuing is not the same as predicting,” he tells them.
“In the short run, the market is a voting machine. In the long run, it is a weighing machine.”
Later he shows a PowerPoint slide that has the Dow Jones Industrial Average on December 31, 1964: 874.12. And on December 31, 1981: 875.00. “During this period the economy grew fivefold, but the stock market went exactly no where,” he says.
It is a provocative statement to a conference with many technology investors in what is still a technology boom, but it is a perfect opening for a book on the career and times of Warren Buffet. He ends his presentation by telling his audience to expect a long term return no more 6 percent and to expect the stock market in the long run to do no better than the economy.
Direct quotes from the author’s Interviews help the reader to understand the philosophy and strategies that brought personal and financial success. He avoids debt and leverage and the risk that goes with it. He is never a passive investor, but exerts his influence directly and by finding the right people to manage the companies he acquired.
These interviews and discussions include national financial issues. Because Buffett was directly involved in some of these financial issues, there are archival accounts of national financial news with insider details. He was a part of efforts to rescue Salomon Brothers and Long Term Capital Management after he had objected to, and warned against, the use of derivatives and other speculations in the early years as they turned into a controversial issue.
Readers should be warned it is a very long book that includes discussions of family members and their personal lives: relationships, careers and interests. You’ll meet many business and personal friends, often with lengthy asides and narrative profiles.
These other parts of the life and career of Warren Buffett contrast with the discussion of finance. But for someone interested in finance and financial issues, it is definitely worth the time.
Fred Siegmund covers America’s jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com