Buffett: Portrait of an Artist
as a Young Man
(August 25, 1999) -- As Buffett has said, Berkshire Hathaway is his "canvas." What Lowenstein draws from this is that Buffett's obsessive creation of wealth is something like an ongoing artistic wager against mortality, an accumulation of fragments that Buffett can shore up -- with beautiful compounding interest -- against his inevitable physical ruin.
Indeed, aside from his relatively recent indulgence in a Berkshire corporate jet, there's little indication that Buffett cares for his money at all beyond the pleasure he has in accumulating it and the fact that it allows him to be independent enough to spend nearly all of his time making more. He lives in a modest home in Omaha in easy sight of a public street. He drives an old car. He maintains a modest office with a tiny staff.
Moreover, he has never sold any of his Berkshire stock, and as a result, he relegates very little of his personal income to charity (though he does give a percent of Berkshire profits to the charities designated by each individual shareholder). Still, it's not that he lacks a social conscience.
In 1969, Buffett applied to join Omaha's all-Jewish Highland Country Club. He wanted to use his acceptance there as a means of confronting the waspish Omaha Club, to which he already belonged, and inducing its members to admit Jews, who were then excluded. The same year, he and his business partner, Charlie Munger, underwrote the legal appeal to a California court case that proved a landmark victory for those seeking to legalize abortion. He has also personally financed the college education of many African-American students from Omaha.
But Buffett's spirit of self-reliance runs deep. He's also addicted to tangible returns and seems uncomfortable with the fact that much charitable giving doesn't translate clearly into bottom-line results. Still, since he also doesn't believe in leaving large sums of money to children (he favors an "enormous" inheritance tax), most of Buffett's money will go to his foundation when he dies.
Lowenstein believes that this apparent stinginess really goes back to a psychological need that the "canvas" is fulfilling for Buffett. His "fear of death has contributed to his drive to accumulate," Lowenstein suggests.
The mix of his talents and his circumstances has led Buffett, it seems, to thrive on a kind of Emersonian self-reliance and intellectual independence even as he desperately clings to continuity, as if the supremely self-confident person that he is might slip away if the various tissues holding his life in place vanished. Lowenstein describes him as childlike in his obsession, a man who is happiest poring over an annual report and always likely to have one handy.
But Buffett's intense focus also makes him incapable of recreating himself, and he is threatened by anything that might force him to do so. He's someone who in a sense needs to be sheltered both from many of the practical chores of life and from unnerving emotional entanglements. His genius needs its untethered space in which to flourish, and he's spent most of his adult life around people who would insure he got it.
Perhaps the most surprising example of his need for continuity is found in his personal life. According to Lowenstein, Buffett's wife Susie had long been his chief comfort and protector, handling all of the family matters, like buying a new car, that he simply took no interest in. In 1973, however, Susie decided to move to San Francisco to pursue a long-delayed career as a nightclub singer. With her three children grown and out of the house and Warren traveling a great deal to keep track of his investments, she simply wanted her own life. Buffett was mystified and devastated.
Soon after, however, it became clear that not so much had changed after all. He and Susie would still vacation together for weeks at a time. She would still talk to him almost daily. And to compensate for her absence from home, she encouraged women from her wide circle in Omaha to look in on him. That's how Buffett got to know Astrid Menks, a Latvian woman of 31 who traveled in Omaha's bohemian circles. Within the year Astrid had moved in with Buffett. And now, the two women both remain very much a part of his life. The three of them send out cards together and sit side by side in perfect harmony at Berkshire's famed annual meetings.
Buffett's investing has embodied this same spirit. "In a sense, his whole career has been an act of holding on -- of refusing to say goodbye," Lowenstein writes. Buffett has made a number of "lifetime" commitments to the companies he's invested in. When he bought into Capital Cities as part of its bid for ABC -- now part of Disney (NYSE: DIS) -- he signed over his proxy rights to CEO Tom Murphy as a sign of ultimate trust. Moreover, many of Buffett's greatest investments -- such as the Washington Post (NYSE: WPO), Coca-Cola, and GEICO -- have marked personal returns of one kind or another, attempts to bring some earlier part of his life full circle.
Moreover, Buffett has always worked to educate those investing with him to see things as he does, to become long-term investors in Buffett. As a result, the Berkshire Hathaway shareowner meetings are like family reunions, with an air of community and continuity that Buffett obviously enjoys.
The point of all of this, really, is that Buffett's genius for long-term investing has something more than an intellectual rationale behind it. Yes, Ben Graham helped Buffett develop an investment framework that makes it easy for Buffett to serve as a counterpoint to an entire age, with its technical analysis, modern portfolio theory, efficient market theory, and now day trading.
But what Buffett shares with other remarkable but quite different investors -- such as George Soros -- is an understanding that an investment philosophy works best when it is deeply personal, a reflection of one's larger approach to the world. Buffett's success, then, might be partly chalked up to one great insight that any investor can follow: Know thyself, and invest accordingly.
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For more on Buffett's investment style, see Dale Wettlaufer and Yi-Hsin Chang's recent interview with Robert Hagstrom, a Legg Mason fund manager and author, most recently, of The Warren Buffet Portfolio. For a rundown of Berkshire's current investments, click here. Also, check out Dale's frequent and insightful commentary about Buffett and Berkshire in the archives of the Fool's Boring Portfolio. For more on Buffett in general, see the recent Fool special on Warren's World