andydee

2 Concerns with Michael Lewis's Review of Buffett Book 'The Snowball'

wobatus,

Thanks for the info on the Danny Devito movie. Goggled it and recalled that one of the best things about the movie was his co-star, Penelope Andrea Miller. She's sexy in OPM but her characterization of Brando's daughter in The Freshman, opposite Matthew Broderick was beyond delicious.

The guy that wrote this article is an obvious loser. The only reason people are reading it is because of the subject matter.

His two "concerns", imo, have been exposed as bogus - because he failed to read the Michael Lewis article in full, so he completely misunderstood Lewis' reference to "Betting against Buffett", and secondly, is obviously unaware of the context of Lewis' comment on "Buffett-the-student-w... purchase of 30 shares of GEICO in 1951. Of course Lewis should not have selected THAT purchase of GEICO as THE example of Buffett's break with Graham...there are other better examples, but even using GEICO, Buffett's 1976 purchase would have been a superior example.

There were other more obvious early "breaks", (I put that in quotations because I don't believe that Buffett actually "followed" Graham - he just learned from him and adapted Graham's philosophy into his own), Graham bought lots of cigar butts because he didn't know anything about the company except that the share price was less than working capital...so many of the cigar butts would eventually fail. Buffett, working in Graham's office, dutiful filled out the Graham-Newman "briefs" on these cigar butts but wanted to know more about the underlying business and the management. Graham didn't give a damn about the business or the management. I'd say Graham was closer to DeVito's character of "Larry the Liquidator", except that Larry the Liquidator knew more about his investments than Graham knew about his.


On May 20 07:28 AM wobatus wrote:

> Other People's Money was the DeVito movie. The buggywhip line is
> the best. Even the best damn buggywhipmaker went out of business
> and was better off selling off his stock then continuing as a going
> concern.

2 Concerns with Michael Lewis's Review of Buffett Book 'The Snowball'

Here's my guess...the author of this piece on Michael Lewis' review of Alice Schroeder's book read the review by Lewis BUT did not read the book by Schroeder!!

This quote ""felt confident of being able to predict what it would be worth in a few years. ... A less Graham-like analysis could hardly be imagined. Graham's 1920s bubble and Depression experiences had made him suspicious of earnings projections. But Warren was betting three-quarters of his patiently acquired money on the numbers he had calculated." is an excerpt from Ms Schroeder's book(pg 138).

That page starts with this sentence..."This was especially true because, at its current price, GEICO was an investment that Ben Graham would not have approved of, even thought Graham-Newman had only recently become its largest shareholder."

However, I am reading the book - and don't care for it by the way...(fortunately, like Warren, I'm cheap and I didn't pay for it - I've got it for 21 days from the public library...), and this IS NOT when Warren broke with his mentor...IF this was the time, (the incident in question concerned Warren dumping 3/4's of his then meager portfolio and buying 350 shares of GEICO - in 1951!!), he would not have continued to buy "cigar butts" for 20+ more years.

No, as the author points out his metamorphosis into the Warren we know came after he began his relationship with Charlie Munger.

Although Alice doesn't point this out in her book, I believe it was Charlie that got Warren interested in Phillip Fisher's book, "Common Stocks and Uncommon Profits", which I think was where Warren may have borrowed his notion that every serious investor ought to get a ticket with only 20 "chances" on it - representing the limit of his/her lifetime investments. If that was so, each choice would be thoroughly investigated...of course, that's not how Warren did it - or how Charlie did it.

BTW, I don't mean to imply that Charlie "taught" Warren how to invest, or that he changed Warren's mind about what he had learned at the "foot of Ben Graham". Clearly Warren was his own man - he has simply "boosted himself up onto the shoulders" of those investors he admired.

I can't count the number of book I've read about Warren - though I find them interesting - they haven't been influential...unfortun... - but this is the first one I've come across that makes Warren seem a bit closer to Gordon Gecko and a character played by Danny DeVito in a movie whose name I've forgotten...including the tendency towards lecherous behavior - especially involving Katherine Graham...

It isn't a book you can sit down and read for long stretches...or at least I can't...BTW what's amusing to me, as skim through the pages describing Warren's support of liberals such as Eugene McCarthy!! and his strange relationship with his wife - I keep recalling the advice Jack Palance, as Curly, in "City Slickers" gives to Billy Crystal's character...when he holds up his index finger and says that's the secret to life..."Your index finger?" says Billy, "No", says Jack, "ONE". "Do one thing well, and everything else falls into place". That's advice Warren understood before he saw the movie. His success at making money has opened up vistas he never conceived of...

Now I make a great Gumbo Soup...but...

What You Can - And Can't - Learn from Warren Buffett

Rick,

Well written, fair review.

My question: I have a couple of Buffett books, (Lowenstein's, "The W.B. Way", "Buffetology", "Of Permanent Value") and "Security Analysis" - but would like to round out my collection with a couple on Charlie Munger, and more of your favorite Buffet books - do you have any recommendations?