Warren Buffett is an accomplished enough guy that a full account of his career probably deserves several volumes of rather larger size, but this is a good introduction to his life, career, and general investment philosophy. While it suffers from having been published in 1995, meaning that it includes nothing on the last third of his career (though the 2008 edition contains an updated Afterword), it's useful enough to be worth picking up for anyone who's interested in his investment history, a broad overview of his strategies, or simply curious about his personal life.

What should an investor, or anyone interested in finance, make of Buffett's career? He didn't invent value investing, which was pioneered by his mentor Ben Graham, but he's been its most famous and successful practitioner so consistently over the decades that it seems like there must be some trick beyond simply looking at P/E ratios and book values. It seems implausible that Buffett has simply been lucky - he's just way too rich - and yet it's hard to explain his run of success using common views of how finance works. The history of finance is replete with the corpses of investors who tried to beat the market too consistently and by too much (keep an eye out for Salomon Brothers executive John Meriwether, whose spectacularly doomed hedge fund Long-Term Capital Management would be the subject of Lowenstein's next book, When Genius Failed), and yet despite a recent spate of poor performance, Buffett has been beating the market regularly for 63 years, longer than a majority of investors have been alive. Has he been exploiting some kind of glitch in the Efficient Markets Hypothesis? Does his particular variant of buy-and-hold have a hidden advantage over index funds? Is value investing exempt from law of large numbers/diminishing returns issues? Will a strict avoidance of conflict and hostility be a superior strategy in an environment of leveraged buyouts and junk bonds? Lowenstein can't completely settle these questions (if it were that easy to replicate Buffett's success, surely there would be more than one Buffett by now), but his accounts of how Buffett viewed his strategic issues offers a lot of insight into what motivated each particular investment decision.

And there are plenty of decisions. Going into the book, I knew that Berkshire Hathaway was his investment vehicle, but I had no idea of its history as a gradually declining textile conglomerate before Buffett transformed it beyond all recognition. As he was gradually nudging the company away from its roots in the New England cotton mills that had been its livelihood, I was reminded of Danny DeVito's speech in Other People's Money about not letting sentimentality about old business models holding back future growth, though Buffett's later adventures like getting into a circulation war as owner of the Buffalo News showed his emotional side. Buffett himself considers his purchase of Berkshire Hathaway a mistake, given that his initial large share purchase was motivated in large part by spite after a counterparty at the firm tried to chisel him out of 1/8 of a point on the share price; if he had simply invested directly in the insurance businesses rather than buy them through Berkshire, he would have made about twice as much money. Lowenstein quotes from "The Joys of Compounding", where Buffett makes the same point in a different way:

"I have it from unreliable sources that the cost of the voyage Isabella originally underwrote for Columbus was approximately $30,000. This has been considered at least a moderately successful utilization of venture capital. Without attempting to evaluate the psychic income derived from finding a new hemisphere, it must be pointed out that even had squatter's rights prevailed, the whole deal was not exactly another IBM. Figured very roughly, the $30,000 invested at 4% compounded annually would have amounted to something like $2,000,000,000,000 (that’s $2 trillion for those of you who are not government statisticians) by 1962."

In other words, always pay attention to the opportunity cost of money, and realize that even seemingly very successful purchases might have foreclosed even more profitable, if more subtle, options. Of course, Buffett's actual record doesn't look so bad - GEICO, Coca-Cola, American Express, Wells Fargo, Salomon Brothers, etc. - yet it seems like there's a consistent theme, that being bearish when everyone else is bullish, and vice versa, is a consistently safe strategy, particularly when investing in large brands with stable fundamentals. For lack of a better way to put it, other investors who tried to be as cautious as Buffett were never as bold when the situation called for it, and investors who tried to match him in boldness usually lacked sufficient caution at key moments.

Whether that's a philosophy that can be sufficiently mathematically rigorized is beyond me, and Lowenstein doesn't attempt to quantify Buffett's strategies. That's fine for a short volume, because it leaves room for the biographical information that most readers will want. The book covers his childhood in Omaha, his college years, his study under value investor Ben Graham, his partnership with like-minded investor Charlie Munger, his marriage and mistress, and his often-strained relationships with his children. Buffett has been famously miserly and uninclined towards charity, which the book explores. Whether you agree with Milton Friedman's infamous paper that "The Social Responsibility of Business Is to Increase Its Profits" or not, the contrast between Buffett's repeated statements that he plans to give all his money away and his actual record of relatively minor philanthropic activity is striking, especially also given his refusal to establish a Rockefeller-type dynasty and his advocacy for higher taxation of the rich. Yet even if there's a philosophical contradiction in there somewhere, Buffett's integrity is unquestionable, particularly when he's sharing the stage with characters like Ivan Boesky or Michael Milken.

Overall Lowenstein does a great job of condensing Buffett's life, ideas, and career into a single manageable book, and though I often wished he would expand more on topics, doing so would have made the book less accessible. He's a more sensible and less sensationalist writer than someone like Michael Lewis (whose misrepresentations of Buffett's record come in for some criticism), and while this book probably won't be the last stop for anyone curious about one of the greatest investors in history, it's an excellent first one. ( )

Good

It's a great read. Amazing for an author who did not have direct access to the subject. I've read Snowball and realized now, how detailed Snowball is!! Events mentioned in passing here are described in such detail there. But there is more emphasis on Buffett's investment philosophy and how it weaved into his life, and less on his personal life. It could be because of the limited access he had. Only topic which is covered in more detail here is the EMT (Efficient Market Theory) and Buffet's disagreement and distaste with it. If you are not interested in a really detailed account of Buffett's life and don't care much about his personal life, this is the book. ( )

38/2009. If all capitalists were like Warren Buffett, the U.S. would have a solid economy and the world would be a better place. This is a bit of a saint's life (and his wife, kids and friends also come off well), but it doesn't seem misplaced and Lowenstein does point up Buffett's later missteps. It also works as a history of U.S. investing (I am right now looking at one of those Andrew Tobias books from the '70s saying cans of tunafish have a better return than the stock market) and a narrative of how judgment turns to sentiment with age, how people get stuck in history and their own history. (BBN, July)

Mr. Lowenstein does a fantastic job making the financial world understandable to people who aren't involved in it. This book did a great job as a biography. I found it a fascinating look into Mr. Buffets life. ( )