Buffett: The Making of an American Capitalist

As the title indicates this book is a biography of the self-made billionaire investor Warren Buffett. It takes us through his family upbringing, his early years, his eduction and the building of his capitalist empire in Berkshire Hathaway. The author focuses on the people that were influential in his life, particularly his mentor in value investing: Benjamin Graham. This theme is central to Warren's investment strategy (with adaptation on intangibles - such as brand, reputation etc.) . Through the years, despite all the macro-economics event, changes to the business landscape and technological advances this strategy has driven unparalleled sustained business returns over a period of over 40 years which the book covers. The book is full of non-investment business advice, relationship building, career management etc. Below are some excerpts from the book I found particularly insightful: -"One sees in Buffett a strongly similar suspiscion of public opinion. Buffett viewed a crowd as a potential source of a sort of intellectual contagion. It was the author of acts and feelings which, rather than being a summing-up of the parts, no one individual among the crowd would have subscribed alone." -"Regardless of price, we have no interest at all in selling any good business that Berkshire owns, and are very reluctant to sell sub-par businesses as long as we expect them to generate at least some cash and as long as we feel good about their managers and labor relations. We hope not to repeat the capital allocation mistakes that led us into such sub-par businesses....Nevertheless, gin rummy managerial behavior (discard your least promising business at each turn) is not our style." -"A compact organization lets all of us spend our time managing the business rather than managing each other." -"Buffett's guides to finding such a stock could be summarized quickly: a) Pay no attention to macroeconmic trends or forecasts, or to people's predictions about the future of stock prices. Focus on long-term business value - on the size of the coupons down the road. b) Stick to stocks within one's "circle's of competence." For Buffett, that was often a company with a consumer franchise. But the general rule was true for all: if you don't understand the business - be it a newspaper or a software firm - you couldn't value the stock. c) Look for managers who treated the shareholders' capital with ownerlike care and thoughfulness. d) Study prospects - and their competitors - in great detail. Look at raw data, not analysts' summaries. Trust your own eyes, Buffet said. But one needn't value a business too precisely. A basketball coach doesn't check to see if a prospect is six foot one or six foot two; he looks for seven-footers. e) The vast majority of stocks would not be compelling either way - so ignore them. Merrill Lynch had an opinion on every stock; Buffett did not. But when an investor had conviction about a stock, he or she should also show courage - and buy ton of it. -"I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, to be read by their spouses, children and friends...If they follow this test, they need not fear my other message to them: Lose money for the firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless." -"Among history's great capitalists, Buffett stands out for his sheer skill at evaluating businesses. What John D. Rockefeller, the oil cartelist, Andrew Carnegie, the philanthropic steel baron, Sam Walton, the humble retailer, and Bill Gate, the software nerd, have in common is that each owes his fortune to a single product or innovation. Buffett made his money as a pure investor: picking diverse businesses and stocks." -"More than most, he reclaimed the rewards that spring not from trading commitments one for the next, but from preserving them." For anyone interested in the field of investment, it goes without saying that this is a must read book. Given that I had read another book by Roger L. (When Genius Failed - The Rise and Fall of Long Term Capital Management), I had very high expectations from him and he did not dissapoint. Don't let the size of the book discourage you, once you get started you will have a hard time stopping.

"Investment is most intelligent when it is most businesslike", Warren Buffett's teacher, Benjamin Graham, once wrote. This book is a fantastic biography of Warren Buffett. I think anyone who wants to learn about Warren Buffett or his investment techniques etc should first read this book before anything else (including his essays). This book is written time-chronogically, from the time around the early 1930s (Buffett was born in August 1930) to around 1994. Here we can observe how Buffett had a great desire to be rich since he was young, but in his teen years, after being involved in several business ventures, he longed for a method which is more consistent in making money. Meeting Benjamin Graham when he was 19/20 years old solved this longing for Buffett. He became a devoted investor in businesses since then. After working under Graham for several years, Buffett began a partnership (noticed how confident he was, despite his young age, to be successful) when he was 26 years old (in 1956) and achieved a 29.4% compounded annual return in the fund (he dissolved the partnership in 1969). During these 14 years, Buffett learnt which businesses (like those possessing customer franchise - Buffett called these with "Deep moats around the castles") were better than others. He dissolved his partnership in 1969 as he deemed the market to be very overvalued then. From then on, he used the lessons he had learnt to purchase great businesses at reasonable (or cheap) prices, such as Nebraska Furniture Mart, Washington Post, Cap Cities, etc. To fully enjoy this book, the reader should stop at certain chapters, and read other - yes, other - related books. For instance, around after I had finished reading chapter 3, 'Graham', I read Ben Graham's 'Intelligent Investor'. Also, when Phil Fisher was mentioned as one of the strongest influencers in Buffett's life, I read his book 'Common Stocks and Uncommon Profits'. The readers can get more insights from reading it this way. Mr. Lowenstein also took excursions when discussing Buffett to go through discussions about certain business characteristics, to ensure that the readers can fully appreciate Mr. Lowenstein's perceived motivation behind a certain Buffett action etc. Mr. Lowenstein also helped the reader to be more knowledgable about key points about US stockmarket history through interesting dissertations. I found these excursions extremely enlightening. Mr. Lowenstein's writing style is also very 'flowing' - he changed from one topic to another in a very smooth way. You've got to read it to understand what I'm saying. Lastly, I just want to say that the readers should have at least a moderate-to-strong knowledge and interest in business (and investing; but business = investing and investing = business) to fully appreciate this book. Enjoy!

Hmmm, well, I haven't even opened this book, but man does it look good on my desk at work. Update upon reading it: It's actually pretty good. Something tells me Lowenstein wanted to avoid delving too deep into some aspects of Buffett's personal life (i.e. his affair, his relationship with his children, etc.). These things are mentioned, but only to the extent that one would expect from an author hoping to maintain a relationship with the subject of his biography. All the reviews I read of this book said the same thing. Its real value is as a highly readable business book. You come away from this bio much more appreciative of Graham-Dodd value investing than you would if you just read it in a textbook, which would give you no context or color. There's an entire chapter devoted to the philosophical debate between Buffett and the Efficient Market Theorists, which was far more captivating than any B-school lecture could make it. My suggestion: if you want an overview of value investing and want to soak up a biography of a truly incredible human being at the same time, read this book.

When I first came across this book, I had planned on reading a Buffet biography for quite some time. I hesitated for a while because there were so many options. As I enjoyed reading Roger Lowenstein's, When Genius Failed, I made my decision to read this particular book based solely on my knowledge of the author. Fortunately, Lowenstein did not disappoint. Indeed, this Buffet biography is very well written and will be entertaining to both the lay person and professional investor, alike. If I could suggest one or two improvements, it would be for the author to reduce the overall length and sprinkle in a few more investing ideas. Also, potential readers should be aware that most of the content ends in the 1990s when the first edition was printed. So, much of the color about his friendship with Bill Gates and his first non-US investment, Israeli-based ISCAR, is missing. Just as he did in When Genius Failed, Lowenstein does a great job describing historical accounts of entertaining or semi-dramatic events in Buffett: The Making of an American Capitalist. Remarkably, the author is able to paint very clear pictures of scenes that occurred 50 years ago. This particular work is especially impressive as the author received no assistance from Buffet himself making the task of collecting details on such events very difficult. Unfortunately, the book contains very little explanation of Buffet's investment strategy. This book is not an investing textbook, which is understandable. Rather, it is a biography that has some elements of Buffet's investing wisdom explained. It would be nice if it had more details on the investing front. Some readers might find the book a bit longer than necessary. Of course, the wordiness may be a matter of personal preference. I would argue that most readers will stay thoroughly entertained throughout the book.

The gain in net of Berkshire Hathaway, the company led by Warren Buffet, worth during 2006 was $16.9 billion, which increased the per-share value of 18.4%. Over the last 42 years value has grown from $19 to $70,281, a rate of 21.4% compounded annually. Consider that $16.9 billion is a record for a one-year gain in net worth - more than has ever been booked by any American business, leaving aside boosts that have occurred because of mergers. Of course, Berkshire did not outperform S&P500 constantly. In 1967, 1975, 1980, 1999, 2003, 2004 the S&P gave better performance, and in 2001 Berkshire even was at a loss of 6.2%. This book, "Buffett: The making of an American capitalist" covers very deeply the values that led Warren Buffet during his life from his early childhood. The book is not only a biography per se, but a good manual on investing, that uncovers most aspects, with the detailed explanations and samples, of investing. This book also covers very well personal traits of Warren Buffett, his attitudes toward parents, sister, friends, parents, children and wife. For example, Warren bought a farm and rented it to his son Howie on standard commercial terms. The farm was a joyful refuge to Howie, but he couldn't get Warren to share the experience with him. "I can't get him to come out and see how the crops are going", Howie said plaintively. Warren went only twice in six years. He would laugh off Howies's invitations, saying, "Send me a rent check, and make sure it's big enough". Though he had been thoughtful enough to buy the farm, he couldn't give Howie the fatherly recognition that he craved in other than financial terms. In his investment strategy, Warren uses the concept that he calls "Intrinsic value" of a company. According to Warren Buffet, intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. Here is what Kenneth L. Fisher wrote about Buffet's investment strategy: a quality standing out about Mr. Buffett is his ability to morph. If you read his materials from the 1960s, he said very different things than in the 1970s and early-1980s. Early on he was buying dirt-cheap stocks by simple statistical standards and typically smaller stocks--which would today be referred to as smallcap value (although that term didn't exist until the late 1980s). Later he bought what he called "franchises." Then he entered a period of buying great managements of big companies and being a long-term holder--otherwise thought of as big-cap growth today--that many ascribed to the influence of my father coupled with Charlie Munger. When Mr. Buffett was buying Coke and Gillette, you couldn't quite reconcile those activities with the kinds of things he owned two decades earlier. Then, amazingly, seven years ago, at just the right time, he was buying smaller things dirt cheap again just as value came back into play as the twenty-first century began. I have other comments about Mr. Buffett throughout this book but I'd like you to see, while he never lost the core of what he was doing or what he was looking for, he tactically morphed steadily over the decades. Trying to freeze his tactics from any decade and replicate them in the next few would never have led you to his actual actions. In addition to this book, I also recommend the letters to shareholders written by Warren Buffet, which can be taken from the website of Berkshire Hathaway. If you take an audio record of this title, it will not be as good as the textbook. The audio is more biographical and pays less attention to the investment education of the listener.

I should have read this book 15 years ago, but I’m glad I did read it while Warren Buffett is still alive. Anything he says going forward will have more meaning now that I know so much more about him.

I think this book is great for 3 reasons. First, it is well-researched. You can see the author has done a hard job putting together materials from various sources (annual reports, newspaper, his own interviews, etc). Second, its portrait is vivid, not only Buffet himself but also other people. I am impressed by the chapter on Mrs B - so lively as if she were coming out from my kindle. I think Lowenstein can also be a great novelist. Third, the book is able to capture the essence of Buffet's investment philosophy. Actually before I read this book I had some questions in mind (e.g. is Buffet's method imitable? how did he survive the tough times of 1970s, and the 1987 stock crash?), and I believe I can find the answers by reading this book.

Great read but not a great print. Some of the chapters were printed mixed together and some missing pages. Having to look up the missing pages online defeats the purpose of buying the book… see the page numbers in the image.

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This book is probably literally worth it's weight in gold. As an insider's perspective on Buffet's journey, it is filled with rich background, captivating stories, and nowdays unique but none-the-less good old-fashioned investing principles. I'm struck by the simplicity of the investment approach, coupled with diligence, integrity and focus - and its proven ability to yield massive returns. Thank you Mr. Lowenstein for a fantastic book, and thank you Mr. Buffett for demonstrating beyond dispute how well these principles work!

Good if you are Buffet fan

El libro que todo inversor debe leer...., pero no pude acabarlo. Se me hizo monótono y pesado. Tras sus inicios, y su comienzo de éxito, el libro se vuelve repetitivo y a mí no me deja ninguna enseñanza en el plano moral sobre esta persona. Hará ricos a muchos pero deja mucho que desear sobre su forma de tratar a su familia. No recomiendo su lectura, mejor comprarlo de segunda mano y te ahorras unos cuantos euros

Well written. Great anecdotes.