#182 Warren Buffett (The Making of an American Capitalist)

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May 29, 2021

Warren Buffett’s journey from novice to legendary investor is packed with fascinating insights. Delve into his formative years, where family and the Great Depression ignited his drive for wealth. Discover his unconventional investment philosophy, focusing on undervalued companies and intrinsic value. Explore his challenges against consensus thinking and media perceptions in investing. The podcast also shares valuable lessons from Buffett's shareholder letters, blending financial wisdom with engaging anecdotes that reveal both grit and humor.

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ANECDOTE

Early Drive for Wealth

At a young age, Warren Buffett became driven to be rich after his family lost their money during the Great Depression.
Even at 7, during an illness, he envisioned his future wealth, filling a page with numbers representing his future capital.

ANECDOTE

First Investment

At 11, Warren Buffett bought his first stocks, making a small profit but missing a bigger gain.
This taught him an early lesson about patience in investing.

ANECDOTE

Lila Buffett's Temper

Warren Buffett's mother, Lila, had unpredictable bouts of rage and criticism toward her children.
This behavior deeply affected Buffett, potentially fueling his drive to succeed and leave home.

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Hard Drive

Bill Gates and the Making of the Microsoft Empire

Jim Erickson

James Wallace

This book is a detailed exposé of Bill Gates' life and the early days of Microsoft. The authors follow Gates from his childhood as an unkempt thirteen-year-old computer hacker to his present-day status as the most powerful and feared player in the computer industry. The book provides a balanced analysis of Gates' business triumphs and his driven personality, including his singular accomplishments, brattiness, arrogance, and hostility. It also delves into the intense atmosphere at Microsoft, the company's strategic positioning, and key events such as the partnership with IBM and the development of MS-DOS and Windows[1][3][5].

Poor Charlie's Almanack

The Essential Wit and Wisdom of Charles T. Munger

Charles T. Munger

Peter D. Kaufman

Originally published in 2005, Poor Charlie's Almanack is a collection of eleven talks delivered by Charles T. Munger between 1986 and 2007. Edited by Peter D. Kaufman, this book draws on Munger's extensive knowledge across various fields to provide a framework for rational and rigorous approaches to life, learning, and decision-making. It is renowned for its sharp wit and rhetorical flair, making it an essential read for investors, entrepreneurs, and anyone seeking to enhance their wisdom and critical thinking skills.

Personal history

Katharine Graham

In 'Personal History', Katharine Graham recounts her extraordinary life, from her childhood in a wealthy but emotionally isolated family to her marriage to the charismatic Philip Graham, who struggled with manic-depression and eventually committed suicide. The book chronicles her transformation from a housewife to the chairman of The Washington Post, detailing her involvement in significant historical events such as the Pentagon Papers and the Watergate scandal. Graham's memoir is praised for its frankness, candor, and historical significance, offering insights into her personal struggles, her professional growth, and the evolution of the women's movement and the media industry.

One Thousand Ways to Make $1000

Page Fox & Minaker

First published in the 1930s, 'One Thousand Ways to Make $1000' is a timeless guide filled with practical business advice. It covers topics such as investing, marketing, and customer relations, providing a fascinating portrait of entrepreneurship during the Great Depression. Although some ideas may seem outdated, the underlying business principles remain relevant today.

The snowball

Warren Buffett and the Business of Life

Alice Schroeder

This book provides an unprecedented look into the life and investment philosophy of Warren Buffett. Written by Alice Schroeder, who gained unparalleled access to Buffett and his inner circle, it delves into the complexities and paradoxes of Buffett's life. The book covers his work, opinions, struggles, and triumphs, and highlights key principles such as intrinsic value, margin of safety, and long-term perspective. Buffett’s legacy is not just his wealth, but the principles and ideas that have enriched people’s lives.

Buffett

The Making of an American Capitalist

Roger Lowenstein

This book provides a comprehensive and detailed account of Warren Buffett’s life, from his early days to his ascension as one of the most successful investors in history. Written by Roger Lowenstein, the book is based on three years of research and includes interviews with Buffett’s family, friends, and business associates. It explores Buffett’s investment strategies, his long-term philosophy of buying undervalued stocks, and his role in transforming Berkshire Hathaway into a highly successful corporation. The book also delves into Buffett’s personal life and the influences that shaped his investment approach, including his mentor Benjamin Graham and his partnership with Charlie Munger.

Security Analysis

Benjamin Graham

David L. Dodd

First published in 1934, Security Analysis is a seminal work in the field of finance that lays the intellectual foundation for value investing. The book, written by Benjamin Graham and David L. Dodd, distinguishes between investing and speculating, emphasizes the importance of thorough financial analysis, and introduces key concepts such as the 'margin of safety.' The sixth edition includes commentary from leading Wall Street money managers and a foreword by Warren E. Buffett, who has praised the book for its enduring relevance in modern markets.

What I learned from reading Buffett: The Making of an American Capitalist by Roger Lowenstein.

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His talent sprang from his unrivaled independence of mind and ability to focus on his work and shut out the world, yet those same qualities exacted a toll.

He emerged from those first hard years with an absolute drive to become very, very rich. He thought about it before he was five years old. And from that time on, he scarcely stopped thinking of it.

Most of us were trying to be like everyone else. I think he liked being different. He was what he was and he never tried to be anything else.

Warren disgustedly reported that he knew more than the professors. His dissatisfaction-a forerunner of his general disaffection for business schools-was rooted in their mushy, overbroad approach. His professors had fancy theories but were ignorant of the practical details of making a profit that Warren craved.

It seemed too good to be true; if the stocks were so cheap, Buffett figured, somebody ought to be buying them. But slowly, it dawned on him. The somebody was him. Nobody was going to tell you that an investment was a steal; you had to get there on your own.

Buffett knew more about stocks than anyone.

He was working virtually all the time, and loving every minute.

His talent lay not in his range—which was narrowly focused on investing—but in his intensity. His entire soul was focused on that one outlet.

He did not draw the usual line between "work" and other activities.

Wall Street's chorus, all reading the same lyrics, was chanting, "Sell." Buffett decided to buy. He put close to one-quarter of his assets on that single stock.

Buffett visited Walt Disney himself on the Disney lot. The animator was as enthusiastic as ever. Buffett was struck by his childlike enchantment with his work-so similar to Buffett's own.

It was virtually impossible to poke through the fog of his concentration.

Jack asked, "How do you do it?" Buffett said he read "a couple of thousand" financial statements a year.

He would go home and read a stack of annual reports. For anyone else it would have been work. For Buffett it was a night on the town. He did not merely do this nine-to-five. If he was awake, the wheels were turning.

As Buffett explained, Berkshire was something he intended never to sell. “I just like it. Berkshire is something that I would be in the rest of my life. It is public, but it is almost like the family business now.” Not long-term, but the rest of his life. His career-in a sense, his life-was subsumed in that one company. Everything he did, each investment, would add a stroke to that never-to-be-finished canvas. And no one could seize the brush from him.

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“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

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