Passion without greed

Remember what Gordon Gekko said about greed in Wall Street? “Greed…is good,” he said. It was a much longer sentence and, in Michael Douglas’ stylized delivery, sounded dramatic. It’s the philosophy Warren Buffett has followed all his life, in a manner as devoid of drama as the act of making billions of dollars can possibly be.

From the beginning, Buffett had a single-minded, almost obsessive, pursuit of wealth. At the age of six, he sold chewing gum door to door. He remembers a woman named Virginia Macoubrie saying she would take one stick, but Buffett refused to break up the five-stick packs. Making a sale was tempting, but it would have left him with four sticks to sell to somebody else — not worth the work or the risk.

A year later, aged seven, he asked Father Christmas for a book on bonds. As a 10th birthday treat, he asked to be taken to the New York Stock Exchange. Soon afterwards, he declared his goal: To become a millionaire by the time he was 35. He achieved it much earlier, and went on to become the richest man on the globe.

This life-long and patient accumulation of wealth is captured in the title of this book as The Snowball. But the book goes much beyond it.

For someone so devoted to the cause of making money — one of his friends described his wife as “sort of a single mother” — Buffett doesn’t spend what he makes, not much of it anyway. His seems to get his kick from the act of making money, not what he does with it.

He pays himself about $100,000 (about Rs 49.8 lakh) a year, which, on salary alone, would place him no higher than in the upper middle class in the US. Aged 78, he lives in the same simple house in Omaha, Nebraska, that he bought in 1958 for $31,500. The old grey suits he is seen in are not tailored in the expensive shops of London.

His apparent disinterest in money became eloquently evident when in June 2006 he gave away most of his wealth to the charitable foundation set up by Microsoft’s Bill Gates and his wife Melinda. That $37 billion gift, in monetary value, is the single-largest act of philanthropy in human history.

Buffett has been better than anyone else at spotting value in a business. That has proved to be an unerring method of making money. But it seems his interest in money runs out once he has earned it. And he is happy to leave to others the task of exploiting his wealth. He is also willing to disown it. The money to Bill and Melinda Gates Foundation has been given without any strings attached. No medical centre, concert hall, or anything else, is to be named after Buffett.

It is perhaps this pursuit of greed without actually being greedy is what makes people want to listen to this “Oracle of Omaha”. Each spring, thousands of investors flock to Nebraska to listen to him chair the annual general meeting of his holding company, Berkshire Hathaway. Its annual report is read from cover to cover, a claim few corporate annual reports can make.

They also listen to Buffett because he tends to be right. He kept away from technology stocks during their boom phase at the turn of the century — he said the software business was not “within my circle of competence” — and thus avoided the bust that ensued soon after.

As far back as six years ago, he did not mince words in talking about the threat of derivatives. On various occasions, he called them “weapons of mass destruction”, America’s “economic Pearl Harbor”, “toxic, and potential “time bombs”.

He went against the grain in another aspect. The man who has stayed ahead of the investment curve for more than four decades refused to write his memoirs. He chose Alice Shroeder to write it, saying, “You will do a better job than I would.”

Once again, his pick is impeccable. Schroeder was an insurance analyst before she spent seven years studying Buffett and she has put together 836 pages of an absorbing saga, full of ambience, drama, and little details that bring a story alive. It’s like an epic, in the tradition of Renaissance literature, and similarly devoid of critical judgment.

THE SNOWBALL
WARREN BUFFETT AND THE BUSINESS OF LIFE

Alice Schroeder
Bloomsbury/Penguin India
960 pages; Rs 995