Tuesday, November 27, 2007

Buffet: Portrait of an American Capitalist by Roger Lowenstein

I am not a big fan of biographies. They tend to be either praiseworthy to the point of idolatry, or else the written equivalent of a bucket of venom dumped on the subject’s head from a great height.

In Buffet: the Making of an American Capitalist, Lowenstein errs on the side of idolatry, but that’s forgivable since Buffet has become such a idol to independent investors everywhere. His achievements speak for themselves, but what of the man behind the investment genius?

Here Lowenstein’s research clashes with his wish to praise his subject. Buffet’s flaws are mentioned only in their excusing. The picture that emerges is not one radically difference from what might be considered the ‘average’ view of Buffet, but it is considerably fuller.

Buffet’s achievements cannot be overstated. He has consistently and over a period of decades outperformed not only the markets, but more crucially the investment houses, stockbrokers, fund mangers and others whose job it should be to do this, but who barely manage to keep pace with the market. Buffet has made his money by ignoring every fad to pass through Wall Street and focus on the fundamentals.

Buffet’s achievements are routinely ignored not only by Wall St but also by the economics professors whose theoretical models purport to show how the market works. Buffet has shown them all to be wrong, again and again, simply by focusing on the fundamentals. Are earnings growing? Are dividend payments increasing? Does the company have a competitive edge over its rivals, or better yet, no rivals? Simple questions, asked again and again.

All of this is the known quantity, the background to the fuller picture this biography provides. Lowenstein manages to give us a good picture of the man himself. Buffet is not an enigma. He likes his home comforts, he doesn’t like change. He makes connections with people slowly, and breaks them only with great reluctance and sorrow.

The source of Buffet’s wealth is perhaps the greatest determinant of his behaviour. He doesn’t spend a lot of money, nor lavish expensive gifts on others. His knowledge is his and his alone, he discusses his thoughts with few. His legendary letters to shareholders are self-deprecating past the point of fault.

His family feel estranged from him, he has managed to isolate himself through his immersion in his work. His children received no advice from him in matters financial; not even the basics. Buffet’s son notes that while his father gifted him Berkshire Hathaway stock, he did not tell his son that he would be better to borrow against the value of his shares rather than sell them.

Buffet spends little on himself, or on his wife and partner. It seems Buffet cannot bring himself to part with money, looking not at the one thousand dollars he is spending, but at the one million dollars he would have in twenty-five years if he invested that one thousand instead. The result is that one of the world’s wealthiest men can spend little on himself, and less on his family.

While Buffet has a great talent for investing and making money, he has no talent for spending money or for maintaining basic human relationships. All the family Lowenstein talks to, while generally praising Buffet, at one point or another each express their exasperation with him.

If there is a point to his investment successes, other than the accumulation of wealth and the pleasure of outperforming the ‘experts’ it escapes Lowenstein. I suspect it escapes Buffet too.

The portrait emerges of a man who is good with money but not with people, especially not with those closest to him. The relationship between shareholder and manager is one he understands; the relationship between parent and child less so.

Readers hoping for a glimpse of some magic wealth-building formula will be disappointed. The answer is the kind of common-sense truism your grandparents would have bored you with, if you ever listened.

What emerges instead is a poignant glimpse of a man who in spite of all his achievements remains somewhat estranged from basic human relationships.

Friday, November 23, 2007

Space by Stephen Baxter

Most people have been troubled by the Fermi Paradox, even if not consciously. The Fermi Paradox is basically this – if there are aliens, they would be here. They aren’t here therefore there are no aliens. Yet in a galaxy so large, there must be aliens, so where are they?

For decades now we have had the ability to detect highly advanced civilizations anywhere in the visible universe. But we have seen nothing. Even allowing for the horrendous distances involve din space, it shouldn’t take more than 100 million years to colonize a galaxy. Galaxies are billions of years old. We see no signs of engineering on a cosmic scale though, not in this galaxy or any other.

But do we even know how to look?

This is where the novel Space picks up. With one researcher picking up anomalous heat signatures in the asteroid belt, the paradox has an answer. They exist, and they are here. But why? And why now?

Why should aliens appear just when we ourselves have the technological potential to become space faring ourselves?

Baxter’s character race to resolve this paradox, aware that time may be running out for humanity. Instead they discover the terrible truth, that time is running out for everyone.

Perceptions, and the ability to perceive are the dominant theme of this novel. Baxter elegantly takes known attributes of the solar system and says what if…?

Science books get a bad rap. I don’t even want to call Space one. It’s a science novel. It takes a scientific principle and teases it out. In this book you will find one possible solution to Fermi’s riddle. You’ll also find a great story.

Sunday, November 18, 2007

Forget It

This Economist article got me thinking. Pierre Bayard divides all books into four categories:
• books unknown to me
• books I have skimmed
• books I have heard about
• books I have forgotten

I have no hesitation in placing the majority of books in the world into the first category. Let’s not pretend otherwise.

Skimmed? Skimmed? I don’t know. I honestly don’t remember skimming any book, ever. Oh wait, yes I do. The First Men in the Moon by H.G. Wells. I had to read it for a university subject, and found it unreadable. My essay came back with a comment on it “you don’t appear to have read this book.” There’s a good reason for that.

In general though, I don’t skim. Some books I find unreadable, but those are simply put down, never to be picked up again. Skimming is a very small category.

Books heard about but not read? Well, put most of the ‘classics’ into that category. Is that bad? Probably. I mean in 2006 I read Catch 22 for the first time. I’m 34! That’s just embarrassing. This is a large category, I must confess, but not nearly so large as the ‘unknown’ first category.

The last category is ‘books forgotten’. I guess that means, ‘books read that cannot be recalled word for word? I don’t know.

I wouldn’t say I have forgotten every book I’ve read. However I will confess the main reason I started a LibraryThing account to record all the books I read this year is so I don’t read them again until I have good and forgotten large chunks of them. If all I can remember of a book is a few generalities and that I enjoyed reading it, then I’m happy to pick it up again.

In practise, this takes about three or four years.

So while my first reaction to the last category was to feel mildly insulted, I must agree to its accuracy, if somewhat reluctantly. In truth, I rely on forgetting books I have read. Otherwise, how else could I read and enjoy them all over again?

Reading and Writing and Reading

I can read faster than I can write about reading.

I wouldn’t have thought so, but it’s true. It’s not that I find it difficult to put some thoughts about a book down in writings. It’s mote that doing so seriously cuts into my reading time. And that’s not on.

Expect some updates soon, with some actual books read. Currently I’m about six books behind and not catching up. What can I say? I Can’t Stop Reading!

Friday, November 2, 2007

Spook Country by William Gibson

In the shadows of the present, the future already exists. It takes a great science fiction writer like Gibson to show us this. Gibson takes a look at the world, wraps it up, and services it back to us in this neat package, shining his light on what no one else can see.

In an early twenty-first century riven by conflicts no one really understands, what is a classic spy to do? What is any child of the Cold War to do, finding themselves finally and firmly, in the future the never saw coming?

Spook Country comes with a gripping story of spies and counter-spies, and also contains those great touches, those glances at the world of now, that are Gibson's trade mark. Gibson takes us on the journey through the future, but it's the future of today that we see.

They give awards for the best guide for taking you up a lonely goat hill in the middle of nowhere, so why not have an award for best guide to the present day?