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March 2009
Art & Books
Book Reviews
The Tao of Warren Buffett
By Mary Buffet & David Clark
Pocket Books
, €6.99, ISBN 9781847390523
Full marks to this diminutive compendium, co-authored by Warren Buffett’s former daughter-in-law Mary Buffett (no sign of returning to her maiden name) and self-proclaimed ‘Buffettologist’ David Clark.
At first sight yet another collection of aphorisms and insights that grow in fame by the minute — such as Buffett’s advice about needing to have patience with investments: “some things just take time: you can’t produce a baby in one month by getting nine women pregnant”— the value of the book exceeds the richness of Buffett’s wisdom, which is considerable. The editors have also winnowed out new, previously unpublished content, while Buffett’s Tao makes for an enthralling read early in 2009 when any investor is desperately seeking answers as the stock market collapses.
Anyone who holds bank stocks will sigh as Buffett praises simple businesses such as Coca Cola and Gillette – businesses where the products are dumbproof. Yet they will also take hope from Aphorism No.77 —“the fact that people are full of greed, fear, or folly is predictable. The sequence is not predictable”— which is laced with a narrative about Buffett’s decision back in 1990 to invest $289m in the bank Wells Fargo, based on faith in the bank’s management amid a housing crisis not terribly different to the current one. They will also note that it took the stock eight years to double.
As for Buffett’s lifetime aversion to Wall Street (despite his recently buying into Goldman Sachs), it all rings so true post-Lehman that you almost begin to believe the Tao. Aphorism No.60 bashes the MBA: “The business schools reward difficult, complex behaviour more than simple behaviour, but simple behaviour is more effective.” Following it, the next starts: “Every profession is ultimately a conspiracy against the laity,” an explicit dig at the brokers and wealth managers and, one supposes, most hedge fund managers.
Next up is the much over-quoted quip that “It’s only when the tide goes out that you learn who’s been swimming naked.” Originally a tilt at Enron and creative accounting, it assumes a whole new meaning post-Madoff. Then there is No.20: “You should invest in a business that even a fool can run, because someday a fool will.”
That brings the reader straight back down to Nebraskan earth and the Budweiser/Wrigley school of investment. What would be helpful to know is whether Buffett yet sees the market the way he saw it in 1973—4, when he started buying stocks with the appetite of “a sex-starved man in the middle of a harem filled with beautiful women.” That moment will be a big buy signal.
Leadership in the Era of Economic Uncertainty
By Ram Charan
McGraw-Hill
, €16.99, ISBN 9780071626163
A speedy book for a precipitous downturn, this is no doubt the first of many publications on how to lead through a recession. It’s worth one evening, or one flight’s worth of your attention if you are a senior manager or leader. Beyond his initial case study of how Dupont wheeled out a crisis plan last September, the author doesn’t have many narratives, which is a shame. The rest is plain vanilla advice aimed at corporate leaders: managing for the short term, managing for cash and not being faint of heart when it comes to deliberately shrinking a business.
Think Again
By Sydney Finkelstein, Jo Whitehead and Andrew Campbell
Harvard Business Press
, €20.00, ISBN 9781422126127
“Why good leaders make bad decisions and how to keep it from happening to you” is the bold sub-title. Thankfully, the authors are not out to dig up dirt. “We were looking for decisions that were flawed at the time they were made.” As the reader discovers, this is invariably because of a misleading experience or prejudgement, or inappropriate self-interest or attachments. The book is based on academic research, which increases its credibility. You can’t banish bad luck, say the authors, but you can go a long way to eliminating human flaws in decision-making.
Free Market Madness
By Peter A Ubel
Harvard University Press
, €20.00, ISBN 9781422126097
The author is not a capitalism-basher, but as a physician and behavioural scientist he hotly disputes the idea that consumers are rational. Not surprising when he is confronted day after day by obesity and tobacco addiction, which are recurring case studies. The broader narrative regularly goes back to Adam Smith to contrast the by now exaggerated ‘invisible hand’ of the market with unruly consumer behaviour based on unconscious desires. The endpoint is a quest for better regulation to protect consumers from themselves.
The Sustainability Mirage
By John Foster
Earthscan, €19.99, ISBN 9781844075348
This oddly British book nonetheless unearths a major problem, that sustainability’s success as a mainstream, popular political platform condemns it to failure. Not wishing to threaten anyone’s quality of life, still measured as increased consumption, governments are lying to their constituents, who are lying to themselves. Invoking, as is the fashion, Churchill and World War Two, Foster wants a massive, popular campaign for carbon rationing — even though climate change is not Hitler. That’s the problem.
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