In Vanderbilt’s own eyes, he was the avatar of the Jacksonian promise: the hardworking, nearly illiterate son of a poor boatman who, by dint of his own efforts, created wealth far in excess of anything produced by the privileged sons of America’s decadent landed gentry. Paradoxically, he then spent the last years of his life trying to create his own dynasty, leaving the bulk of his investments in the hands of his eldest son in hopes that the Vanderbilts would carry on for generations like the aristocratic Astors and Schuylers. He should have read Mill. Within two generations, his ne’er-do-well descendants had pretty well dissipated the fortune and lost their social standing. His remaining monument is Manhattan’s Grand Central Station, the terminus of his New York Central Railroad. If you crane your neck, you can make out his statue way up there over the entrance, staring out over Park Avenue South.
The Oracle of Omaha
There is no greater contemporary “conjurer in the financial ether” than Warren Buffett, the subject of Alice Schroeder’s surprisingly objective biography, The Snowball: Warren Buffett and the Business of Life. The book is not what I (or, apparently, Buffett) expected from an “approved” bio written with the full cooperation of the subject. Far from being an adoring hagiography, this is as thorough and honest an account of Buffett’s life and career as one could ask for. Significantly, showing Buffett’s warts ultimately serves more to humanize the man than diminish the mogul.
It is hard to imagine there is anything new to write about the eccentric and humble multibillionaire who, as we know, drives his own SUV, carries his own luggage, lives in the same modest house in Omaha where he has resided for decades, works out of an unadorned office with minuscule staffing, dresses like an engineering undergrad, and subsists on a diet of burgers and cherry Coke. And we all know about his oracular annual letter to Berkshire Hathaway shareholders, in which he offers sage investment advice and commonsense insight into the arcana of corporate finance, and the related stadium-filling shareholder meetings at which he and longtime sidekick and business partner Charlie Munger proclaim on all manner of subjects economical and commercial (some 30,000 Berkshire Hathaway stock owners showed up in 2007).
But it turns out we really didn’t know him all that well. Schroeder offers us a nuanced portrait of a surprisingly complex and insecure man whose life is full of paradoxes and contradictions, one who somehow combines a career quite similar to Vanderbilt’s with a philosophy much like Mill’s. The son of an abusive mother and an ideologically wacko father who represented Iowa in the U.S. Congress, Buffett grew up socially awkward, needy, and nerdy. Immature and maladjusted throughout his prolonged adolescence, he was a chronic pilferer of golf balls from the local Sears store.
His saving grace was that he was a born entrepreneur. In high school he started a pinball machine business and had accumulated on the order of 50 grand (in today’s dollars) by age 16. He drifted until graduate school, when he came under the influence of two Columbia University B-school profs, David Dodd and Benjamin Graham, who taught him the virtue of low-risk investing, primarily by scrounging for “cigar butts” (obscure stocks trading below the liquidated value of a company’s assets). He quickly learned how to do the research and analysis required to find these gems in the rough, developing the mind of an actuary in his ability to calculate risks and future returns. It was all about the math of compounding (that’s the “snowball” effect of the title). Buffett was quick to appreciate that it is far better in the long term to reinvest than to spend. Where others saw a dollar today, he saw a hundred in 20 years. Hence his legendary tightfistedness (when a millionaire friend once asked to borrow a dime for a phone call and Buffett found only a quarter in his pocket, he went looking for change).