Warren Buffett chose Alice Schroeder to be his biographer, granting her access to his personal life like no outsider has ever been granted. In The Snowball, she is rather frank and is not always complimentary of the investing legend, which has apparently led to a rift between the two. Here follows a summary of the book.
Some of Buffett's and Munger's personality traits are discussed and contrasted in the initial chapters. Buffett cares much more about how he comes across than does Munger, as Schroeder argues that Buffett has a need to be liked. Munger, on the other hand, has no such need and is therefore much more likely to speak his mind.
Schroeder takes the reader through a business conference/vacation attended by many of the world's rich and famous. Despite his riches, Buffett is excited over the free swag he receives (t-shirts etc.). While many of the guests take part in several outdoor activities, Buffett spends a lot of time in his room, focused on the financial news (CNBC on mute) and his newspapers.
At this particular conference, held in 1999, Buffett is the keynote speaker. While he has often said he does not predict stock returns, he makes an exception in this case. The market has gotten way ahead of itself in relation to the economy, which tells Buffett that future prices cannot continue to appreciate the way they have in the last few years. While he recognized that the internet is a great invention, he speaks of other great inventions in the 20th century where investors made little to no money on average. For example, though everyone knew the automobile would take over the world, there were 2000 car companies at one time, but few were successful. The airline industry has also grown enormously from its birth, but again investors in the aggregate have not been able to make a profit.
As a result, he argues that the price estimates of all of these internet companies are far too high compared to what they are actually worth. Because of the run up in stock prices, Buffett argues that future returns are likely to be closer to 6% than the 10+% everybody is expecting. Many in the crowd believe "Old Man Buffett" to have missed the technology boat, and therefore some put little credence in what he says.
Shares of Buffett's company, Berkshire Hathaway, fell from $80,000 to less than $60,000 as technology stocks rose through 1999 and 2000. Many value investors closed shop and switched to internet stocks, but Buffett didn't waver. When asked about how he was able to do that, he talks about having an inner scorecard. Rather than judge himself by how others see him (outer scorecard), he has an inner scorecard. He asks "If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record, or be thought of as the world's worst investor when you were actually the best?" Buffett would choose the latter, but many would prefer the former.