Just finished Warren Buffet's biography ("The Snowball, Warren Buffet and the business of life") - thank you JP Morgan Chase. It was a great read and generally dead on what you would expect as Buffet enters his adult life. However, there are a few surprises and a few "reminders".
When Warren was young he was an interesting character. One thing that stands out is that he stole his sister's bike. You would never think of that as part of his personality but as things unfold you can see how it happened. From a very young age, and likely since birth, Warren was singularly focused on creating wealth. His behaviour lined up with this singular focus - at all times. One story that reinforces his early business maturity is reflected in the event where a businessman needed someone to liquidate a warehouse of dog food. The gentleman was located in Omaha and needed someone that was in Washington DC to clear the warehouse (Warren was living there at the time) and the only person he trusted was Warren - who was a teenager. Warren came through and cleared the inventory within a week.
Warren also sought out some of the greats in investing landing with Benjamin Graham ("Intelligent Investor"). We often like to make investing complex bought Warren sought investments that were straightforward - investments that could produce cash and had a safety margin.
I saved on quote from Buffet's book because it wraps up how I believe most investors should invest. "...stocks are things to own over time. Productivity will increase and stocks will increase with it. There are only a few things you can do wrong. One is to buy or sell at the wrong time. Paying high fees is another way to get killed The best way to avoid both of these is to buy low cost index funds, and buy over time. Be greedy when others are fearful, and fearful when others are greedy, but don't think you can outsmart the market." "If a cross-section of American industry is going to do well over time, then why try to pick the little beauties and think you can do better? Very few people should be active investors" (pg. 825). This method is wonderfully simple and eliminates stress. Unfortunately, some people feel only complicated advice or secretive methods have value.
Buffet also believed in concentrated risk and often purchased entire companies. He could do this because this is all he did and he surrounded himself with capable operators. Having said that, as you read the book you will see that Buffet made several decisions that were not good investments and caused him significant financial pain. His portfolio of decisions were accretive over time but not without pain.
Buffet's personal life was interesting. He had this interesting skill of avoiding any relational pain to the point of letting his wife leave Omaha and relocate to San Francisco permanently. The author doesn't come forward directly on what happened but the implication was she had interests outside of Warren but none were disclosed. Warren never addresses this personally but pretends all is well. Additionally, Warren actually has another woman move in to his home in Omaha to take care of him. Practically, Warren has two wives - one for the public and one for him domestically. When his first wife passes away he eventually marries the second.
The most significant thing that came out of this book, for me, is Warren's view on the transfer of wealth. Buffet world numbers are staggering for most of us but the concept is consistent. Buffet does not believe in transferring wealth through the generations and has left most of his money to the Gates Foundation. What is significant about this is that he did not leave his money to his own legacy but to somebody Else's. Warren will go to the grave without a perpetual legacy. The remaining portion of his legacy goes to his children's' foundations. I also believe that generational transfer of wealth is not healthy. The future generations of Carla and myself will only receive educational support. Any other wealth achieved, which at this point appears nominal, will be given back to society in some way.
If you like investing and business - you will enjoy this book.
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