Biography Examines Buffett’s Mind, Heart
Many of America’s most dazzling fortunes have sprung from the success of a lone product or idea. With J. Paul Getty it was oil, with Sam Walton, retailing. Most recently, it was Bill Gates and computers.
However, among the great tycoons, Warren Buffett is unique. He is the only one whose vast wealth is built on a singular ability to pick the right stocks and businesses.
“In the annals of investing, Warren Buffett stands alone,” says Roger Lowenstein, a Wall Street Journal columnist whose biography “Buffett: The Making of an American Capitalist” has just been published by Random House.
Over 30 years, Buffett’s portfolio has appreciated at a compounded annual rate of 28.6%. That is nearly three times the gains in the major stock averages. If you had invested $10,000 when Buffett began his career working out of his study in Omaha in 1956, and stayed with him throughout, you would have about $95 million today, according to Lowenstein.
In his extensively researched work, Lowenstein sets Buffett’s career in the context of his early roots, core values, folksy eccentricities and unusual lifestyle.
Dubbed the world’s second-richest man by Forbes magazine, with a net worth of about $12 billion, Buffett lives in the same modest Omaha house he bought for $31,500 in 1957 and works without a computer.
Lowenstein documents how Buffett’s clarity of thought and astonishing memory for statistics enable him to absorb hundreds of company financial reports and consistently pick those whose stocks are undervalued.
He seeks out companies with monopoly power in their market, such as the Washington Post, or with strong brand-name identity, such as Coca-Cola, Disney and Capital Cities/ABC. When these last two announced their plans to merge in July, Buffett stood to realize a $400-million profit.
Buffett has suggested that people approach the stock market as if only 20 investments a lifetime were allowed. In those circumstances, “you’re going to be very circumspect and make better decisions,” Lowenstein says.
Lowenstein says Buffett’s financial success derives primarily from his character--a mix of patience, discipline and an “exquisite trust in rationality.”
