A Book Review by Daniel R. Murphy- The Snowball by Alice Schroeder
Synopsis of Content:
This is the story of the world’s wealthiest man, Warren Buffet, how he got where he is, what he does and what you can learn from it. Schroeder traces Buffet’s background from this childhood through the present. Buffet was a precocious child who read many of his father’s investment books and vowed as a child to be a millionaire by age 35.
He eventually attended Columbia University and studied under Benjamin Graham who became his guru of investment theory. Buffet started as an entrepreneur as a child and by the time he entered college already owned a farm in Nebraska and a business. By the time he left college he was investing regularly in Wall Street. He focused on companies that kept costs low and always made money. Among those was GIECO, an insurance firm that sold policies over the telephone.
After college Buffet returned to Omaha, Nebraska where he was born and raised. He married and continued to invest. He worked as a stock broker and part time teacher and lived carefully on this income, investing all surpluses. He developed a reputation as being cheap.
In 1954 he moved with his wife and 3 children to New York where he went to work for Graham’s investment company. He focused on companies with a good net worth but that were undervalued. After Graham retired Buffet returned to Omaha.
In 1956, with $174,000, at the age of 26, Buffet planned to retire and live off the investment of his savings. He invited some friends to join him and started with six partners including his father in law. Soon others joined the partnership including lawyer Charlie Munger who became his partner.
Buffet continued to reinvest his money and the “snowball” grew over time. By 1966 his investments exceeded $10 million. He bought a textile firm called Berkshire Hathaway. Eventually he laid off its employees and used it as a holding company. By 1977 he held over $70 million in assets. By 1980, when he was 50, Berkshire Hathaway was selling for $375 per share and he was worth over $2 billion. His fortune continued to grow into the tens of billions.
The book also contains substantial information about Buffet’s private life, his marriage and his rather eccentric personality.
The writing is well done. It is easy enough to read. The story progresses well and is well organized.
Notes on Author:
Ann Schroeder was a CPA who became a respected research analyst. Buffet recommended she become full time writer because of her ability. So she did.
Warren Buffet’s company site: http://www.berkshirehathaway.com/
Three Great Ideas You Can Use:
1. Decide you are going to become rich – the decision is essential to attaining the goal.
2. Ignore the short term ups and downs of the stock market – look for value and invest accordingly.
3. Plan to give the bulk of your fortune away to charity.
The Snowball, Warren Buffet and the Business of Life
By Alice Schroeder
©2008 by Alice Schroeder. Random House. 976 pages.Wishing you well,
Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.