Dear Steemians,

I wanted to share some of the information that I highlighted as I was reading *The Snowball: Warren Buffett and the Business of Life* by Alice Schroeder, which is a pretty in-depth biography of Warren Buffett's life. I read this book about once a year, in which I glean new information, which is probably dependent on the stage of life I am at right now. I only started to highlight test midway through the book, so I would like to apologize beforehand that this is not as comprehensive as I would like for it to be.

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Anyways, here are a few clips of what I found truly interesting!

- Three weeks after he joined GEICO, “I was racing around, thinking I had made the biggest mistake of my life. My wife, Dorothy, was up in Hartford, crying and crying.” The market was suggesting GEICO might not survive; its stock had crashed from $61 to $2 a share. Somebody who owned, say, twenty-five thousand shares had just seen their fortune dwindle by almost ninety-seven percent—from more than $1.5 million to $50,000—from enough to live on for the rest of your life to enough to buy a very good sports car. The reaction of the company’s investors and shareholders to the calamity would, in not a few cases, literally determine their fate.

- There was no looking back. She just swung. You got about two inches outside the perimeter of her circle of competence, she didn’t even want to talk to you about it. She knew exactly what she was good at, and she had no desire to kid herself about those things.” (*Regarding Mrs. B of the Furniture Mart*)

- “Such a buyer—no matter what promises are made—usually will have managers who feel they know how to run your business operations, and sooner or later, will want to get into hands-on activity.” Then there is “the financial maneuverer, usually operating on large amounts of borrowed money, who plans to resell either to the public or to another corporation as soon as the time is favorable,” he wrote. “If the sellers’ business represents the creative work of a lifetime and remains an integral part of their personality and sense of being, both of these types of buyers have serious flaws. “Any buyer will tell you that he needs you and, if he has any brains, he most certainly does need you. But a great many, for the reasons mentioned above, don’t subsequently behave in that manner. We will behave exactly as promised, both because we have so promised, and because we need to.” Buffett explained that he wanted the Blumkins to stay on as partners. He told Louie that he would get involved in only two things: capital allocation and selecting and compensating the “top man.”

- Buffett had told his children, “It takes a lifetime to build a reputation and five minutes to ruin it.” He thought of that risk primarily in terms of his own actions. Yet the people he had endorsed had put his reputation at risk. If he had made a mistake, it was to invest in Wall Street yet distance himself from it by relying on someone else; his judgment about Gutfreund’s ability to oversee the runaway culture of Salomon was flawed.

- “I was at my best at giving financial advice when I was twenty-one years old and people weren’t listening to me. I could have gotten up there and said the most brilliant things and not very much attention would have been paid to me. And now I can say the dumbest things in the world and a fair number of people will think there’s some great hidden meaning to it or something.”

- “Let’s say that when I turned sixteen, a genie had appeared to me. And that genie said, ‘Warren, I’m going to give you the car of your choice. It’ll be here tomorrow morning with a big bow tied on it. Brand-new. And it’s all yours.’ “Having heard all the genie stories, I would say, ‘What’s the catch?’ And the genie would answer, ‘There’s only one catch. This is the last car you’re ever going to get in your life. So it’s got to last a lifetime.’ “If that had happened, I would have picked out that car. But, can you imagine, knowing it had to last a lifetime, what I would do with it? “I would read the manual about five times. I would always keep it garaged. If there was the least little dent or scratch, I’d have it fixed right away because I wouldn’t want it rusting. I would baby that car, because it would have to last a lifetime. “That’s exactly the position you are in concerning your mind and body. You only get one mind and one body. And it’s got to last a lifetime. Now, it’s very easy to let them ride for many years. But if you don’t take care of that mind and that body, they’ll be a wreck forty years later, just like the car would be. “It’s what you do right now, today, that determines how your mind and body will operate ten, twenty, and thirty years from now.”

- “Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you. “I know people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them. If you get to my age in life and nobody thinks well of you, I don’t care how big your bank account is, your life is a disaster. “That’s the ultimate test of how you have lived your life. The trouble with love is that you can’t buy it. You can buy sex. You can buy testimonial dinners. You can buy pamphlets that say how wonderful you are. But the only way to get love is to be lovable. It’s very irritating if you have a lot of money. You’d like to think you could write a check: I’ll buy a million dollars’ worth of love. But it doesn’t work that way. The more you give love away, the more you get.”

- “I can’t tell you how much I hate managed earnings in terms of what they do to people. The nature of managed earnings is that you start out small. It’s like stealing five bucks from the cash register and promising yourself you’ll pay it back. You never do. You end up the next time stealing ten bucks. … It snowballs. I gave these speeches after we discovered it. I told them, ‘Now the monkey’s off our back. We don’t have to predict anything to the analysts. Let’s just give the damn handout showing the results every year, and whatever we earn, we earn.’ ”

- Warren Buffett, the not-simple man of simple tastes, now had the simple life of the man that he had always believed himself to be. He had one wife, drove one car, occupied one house that hadn’t been redecorated in years, ran one business, and spent more and more time with his family.

- Buffett had indeed learned through experience that “when in doubt keep holding”; he said, “I’ve made most of my money sitting on my ass.” He never sold failing businesses unless their economics turned from simply bad to parasitic, for personal reasons: He liked the people, the managers, the business, the simplicity of fewer decisions, and the reputation for loyalty.

- Financial institutions were not the only casualties during this phase of the crisis. Another piece of fallout from the Lehman bankruptcy hit Constellation Energy, which saw its stock decline fifty-eight percent in three days. Constellation reached out to a number of parties seeking rescue; Berkshire’s MidAmerican Energy made an offer to buy the entire company for $4.7 billion and Constellation accepted. This offer was a classical Buffett no-lose deal: It was priced at less than half the market value of Constellation the previous week; MidAmerican also injected $1 billion of cash—at a fourteen percent interest rate—into Constellation to provide immediate liquidity, and Buffett locked in the deal with an onerous break-up fee. Whether Berkshire bought Constellation or not, it would make a hefty profit.

- “He deliberately limited his money,” says Munger. “Warren would have made a lot more money if he hadn’t been carrying all those shareholders and had maintained the partnership longer, taking an override.” Compounded over thirty-three years, the extra money would have been worth many billions—tens of billions—to him.1 He could have bought and sold the businesses inside Berkshire Hathaway with a cold calculation of their financial return without considering how he felt about the people involved. He could have become a buyout king. He could have promoted and lent his name to all sorts of ventures. “In the end,” says Munger, “he didn’t want to do it. He was competitive, but he was never just rawly competitive with no ethics. He wanted to live life a certain way, and it gave him a public record and a public platform. And I would argue that Warren’s life has worked out better this way.”

Hope everyone enjoys the clippings! Also, if you have some spare time on your hands, I would definitely recommend this book for a read. 

Have a wonderful week!
Chris