To give you some idea of my work travel the last few weeks, I finished the 37 hour audiobook of The Snowball: Warren Buffett and the Business of Life (don’t worry, it’s only 832 pages of paperback). Well read audiobook (I listen to a lot – best audiobooks were Harry Potter; the Gunslinger Series was pretty good too, though those books at the end of the day left some to be desired, but I digress).
I’ve been a weak Warren Buffett fan for awhile, and we even own about $1,000 worth of BRK (Bershire Hathaway) stock (under our SEQUX holdings – which was incidentally one of the few funds Buffett recommended his original investment group purchase once he dissolved it in 1970). So a very, very small percentage of our portfolio is tied up in the Oracle of Omaha’s holding company, now valued (as of June 5, 2014) at $192,100 per share. This book shed a LOT of light on the history of Buffett, his personal life, and some of the intricacy of his business dealings. For a brief rundown for you non-readers, you should check out Warren Buffett: Bloomberg Gamechangers on Netflix.
The dude always, ALWAYS, had money on the mind, since he was a small kid. I believe he has a genius level IQ and likely has a photographic memory – though it didn’t explicitly state it in the book. Dude is a wiz with numbers and memory of those numbers, and sounds like he works harder than almost anyone in the industry. In his early years, if the book is accurate, he was a machine.
As a kid, he had side hustles all over the place, from pinball machines to golf ball resales and affiliate programs. His paper route gave him money to start investing at a young age, and he was giving stock advice to his teachers. While he found himself under investigation a few times, I believe his ethics and morals were usually solid and it was more unraveling his complicated (and one of a kind) investment approaches that led to his issues. He was a very shrewd businessman who would grind down the opposition until it was a price he was happy to finally buy.
Multiple times, the book mentioned he would rather “buy a wonderful company at a fair price than a fair company at a wonderful price.” While he was very successful in investing (against the odds), he recognized most of us would be better with lower fees – and that investment brokers were at odds with their clients since they got paid no matter what (from basic management fees) and even got paid by the back-and-forth of the transactions as well so had incentives to promote the next hot stock.
The dude also had a very nontraditional marriage, bordering on polygamy, which I didn’t know before. He was married for his wife for 52 years, but for many of those years Warren lived in Omaha while Susie (his wife) lived in San Francisco. Warren had a live-in girlfriend (and friend of Susie’s) for many of those years, and it was implied that Susie had the same situation with one or more men. For his most of his life, Warren was so busy making money, that he didn’t have time for his wife or kids (even when younger) – priorities people, keep this in mind. He stayed married, and his wife was his key social person in all those many social and media events, and she was a billionaire in her own right owning a bunch of BRK stock. With her direction (he was a frugal man, even as m/billionaire, left to his own devices) Warren and her became very, very large philanthropists (pledging many of his billion$ to Bill and Melinda Gates foundation). A couple years after his wife died, he married his girlfriend Astrid in a small family ceremony.
He rubbed elbows, and is good friends, with many famous and good people. Bono was friends with his wife and played at her funeral. Bill and Melinda Gates are his close and personal friends (and Bridge partners). He probably personally knows a good many of the Fortune 500 CEOs.
His investment philosophy was to stick with what he knew, and stay away from what he didn’t. This has resulted in him missing some tech booms, but also missing some tech busts. He also divested himself from the derivatives market in one of his insurance companies prior to the full collapse in 2008, likely limiting his losses. He derided the derivatives market in general (the leveraged packages) and saw the housing bubble awhile before it popped.
The book was very, very detailed – so much so I would guess 20-25% could have been cut. But very interesting at the same time. I liked his childhood stories and some of the outlines of the business deals good and bad. It led a lot more background to the annual reports to shareholders (check them out, very, very good stuff here… and free – direct link to BRK’s website) he puts out each year. (linkable book version below)
After learning much more about the guy, I like him even more. I’m guessing despite the fundamental holdings BRK holds, it will sag hard after he finally dies as he’s like the patriarchal grandfather who everyone looks up to and unspokenly holds the family together. He lives on hamburgers and coke (and no veggies) – so not exactly a Paleo diet – and he’s already had some of his colon removed.
He is conservative financially, avoiding risky investments and NEEDING to understand the basics of the business before purchasing (though still didn’t prevent dogs), thus no tech stocks and he actually talked (talks) against them. He avoided debt. He is/was frugal and liked value since he was a young man trying to build his fortune to a billionaire. He valued friendships more than money, though money is what drives him.
He’s an interesting dude, who would rather live in his original Omaha house than buy or visit vacation homes or safaris. One day, this touchstone on American investing will pass on, and will give partial control (nonexecutive chairman – basically a veto power over the non-named future CEO) over to his son “Howie” – a farmer, businessman, and philanthropist that lives in Decatur, IL (a city, I’m unfortunately, very familiar with). He wouldn’t be my first choice, but as a buffet masthead, he’s probably fine for keeping the CEO in line with is dad’s wishes.
Anyway, if you get a chance, learn more about the Oracle of Omaha. You likely will never see another $192,000 per share stock again after he passes. And take with you his lessons in patience, risk management, and frugality.