By Jason Zweig | Nov. 8, 2012 9:00 am ET
Image credit: Warren Buffett, July 26, 2012, by “thetaxhaven,” Flickr.com
This fall, two more books on Warren Buffett come out.
The first, Tap Dancing to Work (Portfolio/Penguin), is a compilation of more than 80 articles about (and several by) Buffett. It’s edited by Carol Loomis, who has worked at Fortune magazine for more than half a century. Loomis knows Buffett as well as anyone – as one of his closest friends, a shareholder in Berkshire Hathaway, a fellow bridge player and the pro-bono editor of his brilliantly written annual letters to shareholders.
None of the material in Loomis’s book is new (except her introductions to each of the selections), and all of it was previously published in one place: Fortune.
However, none of it has been collected previously in one place, much of it is hard to find online, and nearly all of it remains a delight to read.
Loomis’s article “The Inside Story of Warren Buffett,” published in April 1988, is still one of the most insightful analyses ever written about Buffett. She pointed out then what remains true now: that Buffett deserves at least as much respect for his skills as a businessman as he does for his prowess as a stock picker. (Probably the first writer to point that out was George J.W. Goodman, writing under the pseudonym “Adam Smith,” in his delightful 1972 book Supermoney – but his chapter isn’t included here, since it wasn’t published in Fortune.)
Tap Dancing to Work does a valuable service by collecting several articles and speeches by Buffett (some of them polished by Loomis as his editor). “Mr. Buffett on the Stock Market,” published in November 1999, was a crystal-clear warning that the Internet stock bubble was bound to burst. Read it in full, and you will see Buffett’s mind at work in detail: commanding massive quantities of relevant data, drawing profound lessons from history and piercing the psychological fog that enveloped amateur and professional investors alike. It’s available online, but its sober, irresistible logic comes across even better on the printed page.
This book isn’t for everyone. Many of Buffett’s followers have probably read most of what’s in this book already, while what they haven’t yet seen – snippets of reportage by other Fortune writers on Buffett’s politics, for instance, or letters to the editor from the magazine’s readers – might not interest them much. Conversely, a fair amount of what’s in the book might be too detailed for the casual Buffett fan.
However, for hard-core Buffett junkies, the book is a great reference and an important addition to the list of classic books about him, including Alice Schroeder’s The Snowball and Roger Lowenstein’s Buffett.
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The second book, The Oracle Speaks: Warren Buffett in His Own Words (Agate Publishing), is a compilation of brief quotations from Buffett.
The compiler, David Andrews, a staff editor at the book’s publisher, has done a fine job of rounding up pithy, clever, memorable remarks by Buffett from an impressively wide variety of sources — including speeches, television appearances, government testimony, private lectures to university students and articles from many media outlets besides Fortune, even the Israeli newspaper Ha’aretz.
As always, Buffett has a way with words:
“We want to buy [companies] when they’re on the operating table.”
“[Buffett’s friend Peter Kiewit] looked for three things in hiring people. He looked for integrity, intelligence and energy. And he said if a person didn’t have the first…that the latter two would kill him. Because if they don’t have integrity, you want ‘em dumb and lazy. You don’t want ‘em smart and energetic.”
“We don’t quit selling candy in July just because it isn’t Christmas.”
“What money does is magnify you. Whatever kind of person you are going in…it magnifies…both [your] good and bad tendencies. Money gives you a chance if you’re a slob to be a big slob – a huge slob. On the other hand, if you’re inclined toward doing good things, it gives you the power to do a great many good things.”
“It’s the rinse cycle where you find out how dirty the laundry has been.”
The Oracle Speaks has a few minor editing errors – I’m willing to bet that Buffett never said anyone with an IQ “above the level of 25″ can succeed as investor – but it comes up short in other, more important ways.
The book is repetitive in parts and could have been much more clearly organized. It also omits some of Buffett’s most iconic statements, like his classic dissection of accounting for stock options — “If options aren’t a form of compensation, what are they? If compensation isn’t an expense, what is it? And, if expenses shouldn’t go into the calculation of earnings, where in the world should they go?” — and his spellbinding testimony to Congress in 1991 after the Salomon Brothers scandal.
When quoting from Buffett’s annual letters to shareholders, The Oracle Speaks draws almost entirely on those from 2003 or later, even though Buffett’s reports are available online all the way back to 1959 at ValueHuntr.net and Warren Buffett Resource.
The book misses out on much of the inexhaustible Buffett resources available online. I asked two money managers who study Buffett closely, Matt Pauls of Fernbank Partners and Shai Dardashti of Dardashti Capital Management, for their favorite websites where investors can dive deeper into Buffett’s thinking.
They suggested:
everythingwarrenbuffett.blogspot.com
[Note (June 2017): The sites shown immediately above are no longer active, although the links connect to them as saved at the Internet Archive Wayback Machine.]
Finally, CNBC’s “Warren Buffett Watch,” as Steven Friedman of the investing website Santangel’s Review reminds me, carries full transcripts of all the network’s interviews with Buffett.
You could, in fact, put together your own compilation of Warren Buffett’s most quotable thoughts from these websites. It would be more comprehensive than The Oracle Speaks, you’d save $10.95 and you might have more fun.
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Disclosures: I’ve known Loomis for nearly 20 years. In 2008, Buffett asked me to join Loomis in posing questions to him and Berkshire Hathaway vice chairman Charlie Munger each year at the company’s annual meeting. The Wall Street Journal instructed me to decline on the grounds that such a role might compromise my objectivity; the role later went to Andrew Ross Sorkin of The New York Times.
Source: WSJ.com, Total Return blog, http://on.wsj.com/SELMyU
Resources:
Warren Buffett, annual letters to shareholders, 1977 to date
Warren Buffett, letters to partners, 1959-1975
Carol Loomis (ed.), Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013
Lawrence A. Cunningham (ed.), The Essays of Warren Buffett: Lessons for Corporate America
Roger Lowenstein, Buffett: The Making of an American Capitalist
Alice Schroeder, The Snowball: Warren Buffett and the Business of Life