![]() Readers are likely to come away from the book’s description of Buffett’s life and investment objectives feeling better educated about investing and business, but whether those lessons will translate into great investment results is less than certain. It also is a major insurer that includes GEICO Corporation in its holdings. Today Berkshire owns companies such as See’s Candy Shops, the Buffalo News, and World Book International, as well as major positions in companies such as American Express, Capital Cities/ABC (now Disney), Coca-Cola, Gannett, Gillette, and the Washington Post Company. The book traces how Berkshire evolved into a holding company and how its investment philosophy evolved as Warren learned to look beyond financial data and recognize the economic potential of unique franchises like dominant newspapers. Lowenstein describes how Warren took control of Berkshire Hathaway and cash-cowed its dying textile business in order to purchase stock in other companies. Have the purchase price be so attractive that even a mediocre sale gives good results.” As Warren once explained in a letter to his partners, “This is the cornerstone of our investment philosophy: Never count on making a good sale. The author describes Buffett’s secretiveness about the stocks he picked for the partnership, and his contrasting openness about his guiding principle, which is to buy stocks at bargain-basement prices and hold them patiently. Lowenstein traces Warren’s life from his birth in Omaha, Nebraska in 1930 to his first stock purchase at age 11, and from his study of the securities profession under Columbia University’s legendary Benjamin Graham to his founding of the Buffett Partnership at age 25. The broad outlines of Warren’s career are well known, and the book offers enjoyable detail. ![]() No one is likely to come away from it saying, “Oh, I’m like that guy.” It doesn’t fully convey what a fun, humble, charming guy Warren is, but his uniqueness comes across. Lowenstein’s book is a straightforward account of Buffett’s remarkable life. It’s easy to be a fan of Warren’s, and doubtless many readers of Buffett: The Making of an American Capitalist will join the growing ranks. I think his dietary practices-lots of burgers and Cokes-are excellent. We recently vacationed together in China with our wives. I can’t be neutral or dispassionate about Warren Buffett, because we’re close friends. In reviewing Lowenstein’s book, I must begin with a disclaimer, too. He reveals that he is a longtime investor in Berkshire Hathaway, the company that under Buffett’s guidance has seen its share price rise in 33 years from $7.60 to approximately $30,000. Roger Lowenstein begins his new biography of Warren Buffett with a disclaimer. *Excerpted from the upcoming book, "Shut Up and Keep Talking: Lessons on Life and Investing from the Floor of the New York Stock Exchange," by Bob Pisani.W arren Buffett: The Making of an American Capitalist, Roger Lowenstein (New York: Random House, 1995). If Buffett, who is a skilled value investor, recognizes the benefits of low-cost index funds, it's worth checking out for inclusion in your portfolio as well. Why does active management have such a poor performance? One issue is that the fees are too high, so any outperformance is eroded by the high costs.Ī second issue: Fund managers often do too much trading, which compounds investing mistakes and also can lead to a higher tax bill.Ī third problem: Most trading today is done by professionals who are trading against each other. These traders, for the most part, have access to the same technology and the same information as their competition. The result? Most have little if any informational advantage over their competition. That is so bad that Standard & Poor's, in a 2019 survey of the results, said the performance of active managers "was worse than would be expected from luck." ![]() Their mid-year 2022 report indicates that when adjusted for fees and for funds dropping out due to poor performance, after five years 84% of large cap actively managed fund managers underperform their benchmark, and after 10 years 90% underperform. ![]() Standard & Poor's has been tracking the record of active managers for more than 20 years. Buffett was saying something that had been known to savvy investors and traders for almost a century, but which had taken a long time to seep into the average investor's consciousness: Active fund managers have a terrible track record. ![]()
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