The Snowball: Chapters 29, 30, 31 & 32

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.

Market sentiment was high in the mid-to-late 1960's, and so at times Buffett had difficulty investing. He made a couple of investments in retail which were out of his circle of competence to some extent.

One of them did not work out at all; it was a department store in Baltimore. The problem was that there were three other department stores right nearby, and so they all competed with each other. If one got an elevator, the others would have to as well etc. Buffett saw this as akin to "standing on tip toe at a parade": as soon as one person does it, everyone has to, resulting in everyone being uncomfortable.

Berkshire Hathaway continued to perform poorly through this period. But Buffett did not want to be unpopular, according to the author, so he sometimes made decisions that were in conflict with making money. Instead of shutting them down, he would keep divisions open longer than they should have been.

From his other investments, however, including American Express, Buffett was flush with cash. As such, he was willing to buy National Indemnity for more than he thought it was worth because of the economics of the business. Insurance requires capital to grow, and capital was something Buffett wasn't short of. Insurance also provided a float (money in advance, which only had to be paid back later), which Buffett was an expert at handling.

Finally, Buffett starts to take an interest in something other than investing. He helps finance an anti-war candidate during the Vietnam War, and even volunteers his time as the politician's treasurer. Buffett also shows a preference for something other than collecting money; he announces to his partners that he will make decisions that may reduce returns in return for more enjoyable investing. That is, rather than buy cheap and sell quickly opportunistically, he may keep holding businesses where he likes the nature of the business and the people who run it.