I am currently reading The Snowball: Warren Buffett and the Business of Life by Alice Schroeder. As an authorized biography of Warren Buffett intended for the general public and not a book specifically about investing per se, I think that so far it is excellent. I have only recently started learning more about Buffett, but he is certainly an intriguing person. Schroeder is an excellent writer, and provides both detail and insight into his life as well as does a especially good job of explaining the financial aspects of his activities.
Here are some of the notes that I took while reading the book so far, covering his early years:
- The Snowball title is a metaphor. “Life is like a snowball. The important thing is finding wet snow and a really long hill” How did Buffett’s portfolio grow so big? He started early, and with relentless focus came the power of compounding returns. (He specifically states that credit card debt is a huge obstacle in starting your own snowball!)
- As a teenager, why did Warren want money? A quote from Buffet:
It could make me independent. Then I could do what I wanted to do with my life. And the biggest thing I wanted to do was work for myself. I didn’t want other people directing me. The idea of doing what I wanted to do every day was important to me.
A amazingly common sentiment among those that end up very rich. Independence, not money, as the primary goal.
- Since he felt socially awkward growing up, he was inspired by Dale Carnegie’s now-famous book How to Win Friends and Influence People. Here are some of the rules that he took upon himself to follow:
Everyone wants attention and admiration. Nobody wants to be criticized.
The sweetest sound in the English language is the sound of a person’s own name.
The only way to get the best of an argument is to avoid it.
If you are wrong, admit it quickly and emphatically.
Ask questions instead of giving direct orders.
Give the other person a fine reputation to live up to.
Call attention to people’s mistakes indirectly. Let the other person save face. - By the time he was 16 years old, Warren Buffett had saved up $5,000. This was primarily through delivering over 500,000 newspapers, along with other small enterprises. If adjusted for inflation, $5,000 at that time would be the equivalent of $53,000 in 2007. Talk about a head start for that snowball.
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It’s so true. Being able work for myself, was really the deciding factor on whether or not I should leave my job to launch a venture. Yeah, having the comfort of knowing your going to get a pay check every week is great and all, but at the end of the day, you still have to answer to someone.
But, I can see how working for someone else makes it a lot easier. As a startup, there are headaches I face everyday. We’ll see what today brings. LOL.
Anyway, solid post!
$53,000? Holy….
I think wanting to work for oneself and not having to take orders from a boss is something a lot of people want, so I would have to say that logically, this is not what caused him to be successful. Hard work and staying out of debt, yes, but everyone wants independence — that’s why they sell so many lottery tickets.
Good book so far. I am about 1/4 the way through.
Its interesting to find a book about Warren Buffett that takes you into his personal life and thinking, not just his investment strategies
My snowball melted in hell. Sad story and we all have one.
Anyway, I believe it relates to the theory of pain vs. pleasure. The more pain you have in your life the easier it is to make change so you replace the pain with pleasure. When you are sick and tired of where you life is headed, financially, you will choose to roll your snowball down the hill.
I am enjoying the book too. I am up to about page 220. It is an easy read. (I find some biographies not enjoyable just because I dont like the style of writing) But I’m finding I don’t really care for him as a person. Stealing from Sears? OK, I know we all do dumb things when we’re young, but he doesn’t sound like someone I’d like to hang with.
I wonder how his environment affected his ability to save so much at such a young age. Can the same be done in today’s world…??
“The sweetest sound in the English language is the sound of a person’s own name.” This is the one Carnegie principle that is often abused by oily salesmen and others trying to manipulate people. Someone who adds my first name to the beginning and end of every sentence earns my suspicion if not scorn. Otherwise, Carnegie’s advice is spot on.
We must be at the same point. I was crying laughing on that part about being at the golf course at 0 dark thirty with that third kid, naked, in the pond looking for golf balls. Saying I can’t see anything and they tell him to feel around and then the golf lawn guy rolls over and once again they are working on a physics project. That was great.
“A amazingly common sentiment among those that end up very rich. Independence, not money, as the primary goal. ”
Well, money is nothing without having to attach the goal, it is just a paper.
Independence is the ultimate result of money accumulation. There is limited amount of money that are required to buy car or house so the once that have these goals never get rich. However, independence requires 2 things either a lot of money or luck of need and ability to live basic
I just have one more comment about the Carnegie book. I read it some years ago and found it to be kind of simplistic. Basically boost everyone elses’ ego and be super humble. That’s nice, but kind of too much. I really think you have to be believable when you are complimenting people, not just kiss-everyones-rear, even using their name is kissing their rear in a way.
Somewhere in the middle of book, Carnegie talked about how you really have to like people (for real) and want to surround yourself with people and become a people person. This is really hard for most of us who are introverted or shy. You can’t just become a people person — I guess you could try. But anyway, Dale Carnegie truly liked people — they sensed it, and the worked hard for him. I think some people are just born that way.
never read the carnegie tips before.
i would say that when used in ernest, they can be highly effective. when used improperly, you would come off like a used car salesman.
i can think of a few good examples of this in people i know.
its not just philosophy, its also delivery.
our local TV station is doing a special series to help people get jobs – you can watch 30 second video resumes on TV and online. EVERYONE is a people person – it really helps you learn what NOT to say during an interview.
I read The New Buffettololgy by Mary Buffett, his ex-daughter-in-law. Provides great insight on his strategies. While I’m sure the strategy/math isn’t 100% foolproof, I have practically applied it, and has made my self-directed portfolio watertight in terms of stock selection – highly recommended if you haven’t read 🙂
I finished the book quickly after I got it for Xmas, and here’s what I got from it:
– Way too detailed. I don’t have the book in front of me, but it’s well over 1000 pgs, and Schroeder seemed to use her all access pass to Buffett to excess, detailing a lot of the minute facts a little too far
– I took 1 thing from the book: even though Warren is an investing mogul of moguls, his life is still unfulfilled.
He achieved success to the detriment of some of the main relationships in his life, mainly his wife, but also never has gotten to know his kids as well as he wanted to. Everyone needs to find a balance in their lives in work vs. family, and he never found a balance at all and lost a lot.
Interesting stuff, though, about his formative years and the way he approached things at a young age. Even though he had a LOT of advantages from how he grew up, he was a success mostly because of who he was.
I highly recommend the book about Buffett written by Roger Lowenstein.
I am a sucker for anything on Buffett… The quote about Munger however is something that is super inspiring. I spend most of my free time thinking about increasing my dividend income by purchasing quality dividend stocks. I guess I would be purchasing the book to check it out. Sometimes investment books turn out to be good investments, provided that they are scarce.. A book by Toby crable which sold for less than $100 in 1990 is now worth over one grand..