Читать книгу Warren Buffett - Robert G. Hagstrom - Страница 6

Legends tend to accumulate around people who have accomplished something extraordinary in their lives. In particular, we seem to be fascinated with tidbits about their earliest years, wondering whether, if we look carefully, we could spot clues on how they became successful.

There are many popular stories that swirl around Warren Buffett, universally described as the world's greatest investor. You probably know most of them.

How at age six he set up a sidewalk table selling candy, gum, and soda pop. He bought a six‐pack of Coca‐Cola from his grandfather's grocery store for 25 cents and sold individual bottles for a nickel—a 20 percent return. The next year, he asked Santa Claus for a book about bonds. The year after that, he wanted more, so he began reading his father's books on the stock market. At age 11, he bought his first shares of stock. At age 17, he and a friend bought a used pinball machine for $25 and set it up in a neighborhood barber shop. With the proceeds, they bought two more machines. A year later, they sold the business for $1,200.

But there's one story you may not know, and it is quite possibly the most significant of all.

In 1941, 11‐year‐old Warren, browsing in the Benson branch of the Omaha Public Library, came across a distinguished‐looking book with a shiny silver cover—One Thousand Ways to Make $1000: Practical Suggestions, Based on Actual Experience, for Starting a Business of Your Own and Making Money in Your Spare Time by F.C. Minaker, published by the Dartnell Corporation in 1936. In the fashion of the time, Frances Mary Cowan Minaker used initials to disguise her gender.

Think about a young boy living in Omaha, Nebraska, in the 1940s. There were no televisions, no video games, no personal computers, no smartphones. Yes, there were radio programs and a rare Saturday afternoon movie at the downtown cinema. But for most people, including Warren, entertainment was reading—newspapers, magazines, and books.

Now imagine young Warren running home from the library, tightly clutching his new treasure, bursting into the house, plopping down in a chair, opening the book to page 1 and diving into a new world of how to make money—a world he had not yet fully understood or appreciated.

Minaker's book is long (408 pages) and comprehensive. In addition to hundreds of specific suggestions for new businesses, it offers clear, straightforward lessons on good salesmanship, advertising, merchandising, customer relations, and much more. It is filled with stories of people who turned a good idea into a good business, sometimes with stunning success.

Some of the names are familiar today.

There is the stirring story of James C. Penney, whose first job paid him a measly $2.27 a month. Penney combined his small grubstake with two other partners and opened the first J.C. Penney on April 14, 1902. That first year, store sales amounted to $28,891. James' share of the profits was a tad over $1,000.

Warren flipped another page and read the story of 23‐year‐old John Wanamaker, who persuaded his brother‐in‐law, Nathan Brown, to combine their piddling savings and open a gentleman's clothing store in their home town, Philadelphia. Before them lay the prospects of a national civil war. Behind them were the remnants of the 1857 banking depression that caused massive unemployment and the almost complete ruination of manufacturers and wholesalers. Undeterred, they opened the doors on April 27, 1861; eight years later Wanamaker & Brown was the largest men's retailer in the United States.

With daydreams mounting, Warren read on.

When he came to page 153, Warren must have broken out with a huge grin. Chapter 6 is all about starting a roadside business—something the young entrepreneur had already been doing for more than five years. Chapter 10 is filled with scores of ideas for service businesses, one of which involved placing coin‐operated pool tables in local stores and taverns. From our present‐day perspective, we can see a straight line from that story to Warren's pinball business six years later.

In that same Chapter 10, “Selling Your Services,” we find another story, one that had an even greater influence on Warren's thinking. Here's what happened.

In 1933, a man named Harry Larson was shopping in his local drugstore when someone (we don't know who exactly) asked him how much he weighed. Harry turned around and spied a coin‐operated scale; he put in his penny and got his answer and then moved over to the cigar counter. During the few minutes he waited in line, seven other customers decided to try the penny scale. That caught Harry's attention, and he set out to learn more. The store owner explained that the machines were leased and that his 25 percent share of the profits was about $20 a month (approximately $384 in today's dollars)—leaving 75 percent for the company that owned the scale.

That, Harry told Minaker, was the start of everything. He took $175 from savings, bought three machines, and was soon earning a monthly profit of $98. “Pretty good return on the investment,” he wryly noted. But it was what Harry did next that intrigued Warren. “I bought 70 machines altogether… . The other 67 were paid out of the pennies taken from the first three… . I've earned enough to pay for the scales, and made a good living besides.”¹

That—one penny at a time—is the essence of compounding. We often think of compounding only as it applies to interest. You probably know Albert Einstein's famous quote: “Compound interest is the eighth wonder of the world, He who understands it, earns it; he who doesn't, pays it.” But at its the core the concept is broader and more powerful: use profits to make further profits. Harry Larson instinctively understood it; so did a young Warren Buffett.

Many years later, Warren used the penny‐weight machines to describe his thinking. “The weighing machine was easy to understand,” he said. “I'd buy a weighing machine and use the profits to buy more weighing machines. Pretty soon I'd have twenty weighing machines, and everybody would weigh themselves fifty times a day. I thought—that's where the money is. The compounding of it—what could be better than that?”² It was that exact mental model that formed the outline, the architecture, of what would become Berkshire Hathaway.

And so we come back full circle to Minaker's book and its profound influence on Warren Buffett. One Thousand Ways to Make $1000 lives up to the spirit, if not the letter, of its title: I count 476 new‐business suggestions. Many would qualify as buggy‐whip ideas in our high‐tech world, but many others are remarkably prescient. But for us today, the real value of the book lies in the fundamental principles it offers. Minaker, in her no‐nonsense, listen‐to‐your‐teacher style, lays down important basic concepts about money. In particular, she wants readers to understand the mindset, the essential temperament they would need in order to reach their dollar goals. Taken together, those passages about the essence of making money are some of the key building blocks that helped form Warren's Money Mind.

“The first step in starting a business of your own,” Minaker writes, “is to know something about it… . So read everything published about the business you intend to start, to get the combined experience of others, and begin your plans where they left off.” That means, she insists, learning all you can from both sides of the question: how to succeed and how not to fail. Reading about a business, she says, is like sitting down with a businessman in his parlor and talking about your problems. “Only those who think they know all there is to be known—and more besides—consider such an exchange of ideas foolish,” she writes. What's really foolish, she points out, is spending hundreds of dollars (in today's dollars, probably hundreds of thousands, even millions) to discover that your idea won't work, when someone else who has already tried it and wrote about it can tell you “exactly why it is not a good idea.”³

To give her readers a boost with their research, Minaker includes a 35‐page appendix that lists books, magazines, periodicals, pamphlets, and government publications related to how to start and operate a business. In all, there are 859 different citations on how to succeed at your chosen business.

The lesson was not lost on Warren. At Berkshire Hathaway's headquarters in Omaha, the largest room on the executive floor is not Warren's office but the reference library down the hall. It is lined with row upon row of filing cabinets, all filled with the stories of businesses. These cabinets contain every annual report, past and present, of all the major publicly traded companies. Warren has read them all. From these he has learned not only what worked and was profitable but, more important, what business strategies failed and lost money.

The second step in developing a Money Mind is simple enough to articulate but hard for most people to do. It can be encapsulated in two words: Take action. Or, as Minaker so compellingly puts it, “The way to begin making money, is to begin.”⁴ Hundreds of thousands of people have dreamed about starting their own business, she notes, but never did because they were stuck. Waiting for business forecasts to improve, or perhaps waiting for their own prospects to get better, or just simply waiting for the right moment. They often delay getting started, Minaker writes, “because they cannot see clearly ahead.” The caution here is to be aware that the perfect moment is never known beforehand, and waiting for it is simply a way to hide in the safety of doing nothing.

Another manifestation of this phenomenon, Minaker points out, is people who become frozen because they spend too much time seeking counsel from others. “If you ask the advice of enough people,” she warns, “you are sure to almost end up doing nothing.”⁵ On the surface that might seem to contradict the first dictum (learn everything you can) but it is really a question of common sense and balance. Finding the right balance between educating yourself and then knowing when to take action is, in fact, a key element of a Money Mind.

Those who have studied Warren Buffett easily recognize Minaker's counsel. Yes, Warren discusses big ideas with his long‐time business partner, Charlie Munger. But it is also true that if Warren believes Berkshire is in line to make a good purchase he won't spend all day talking on the phone. He never pauses to make a final decision because the stock market is up or down, or the economy is growing or contracting, or the forecast for interest rates is rising or falling. If it is a good business at a good price, Warren takes action.

Along with her advice, Minaker also delivers compelling inspiration. “Leaving the harbor [with your new business] is like the captain of a ship at sea; you rely on your own judgment and ability,” she writes. She calls it the most satisfying part of a business life.⁶

It's easy to imagine the young Warren recognizing the truth of that. From the time he started selling candy and soda pop at age six, Warren was his own boss. He was steadfastly confident and loved his independence. By the time he graduated high school he was already the richest 16‐year‐old in Omaha. He may very well have been the world's richest self‐made teenager. But he was not yet the millionaire he had once bragged about becoming. That required him to stay in school.

In 1947, Warren enrolled at the Wharton School of Finance and Commerce at the University of Pennsylvania. Despite his father urging him toward higher education, Warren was not easily motivated. He figured he was already doing well and that college would be a waste of time. Anyway, he had already read over a hundred books on business and investing. What could college teach him?

Warren was right. After two unrewarding years at Wharton it was clear he knew more than his professors about accounting and business. Warren was spending more time at Philadelphia brokerages studying the stock market than studying for class. When the fall semester began in 1949, Warren was nowhere to be found.

Back in Omaha, Warren enrolled at the University of Nebraska, and earned a bachelor's degree in one year taking 14 courses over two semesters. All that year, and even after graduating, most days Warren could be found in the library absorbing every book he could find on business and investing.⁷

Sometime in that summer of 1950 he found a copy of a newly published book by Benjamin Graham—The Intelligent Investor. More than any of the hundreds of books he had read, he regards this one as the book that changed his life.

It led him to start researching business schools, and later that same summer he discovered that Benjamin Graham and David Dodd, coauthors of the seminal work Security Analysis, were listed as professors at Columbia University. “I figured they were long since dead,” he said.⁸ So he quickly submitted an application to Columbia and was accepted. By September 1950 he was 1,200 miles away from Omaha, walking onto the New York City campus.

Warren's first class was Finance 111‐112, Investment Management and Security Analysis, taught by David Dodd.⁹ Before heading to New York, Warren had grabbed a copy of Security Analysis; by the time he got to Columbia, he had practically memorized it. “The truth was that I knew the book. At that time, literally, almost in those seven or eight hundred pages, I knew every example. I just sopped it up,” he said.¹⁰

When the spring semester began in 1951, Warren could hardly contain himself. His next class was taught by Benjamin Graham, a seminar that combined the teachings in Security Analysis and the lessons from The Intelligent Investor linked to actual stocks that were then trading in the market.

Graham's message was simple to understand but revolutionary in practice. Before Security Analysis, the common Wall Street approach to picking stocks was to begin with some overall opinion about a stock—do you like it or not—then to try to figure what other people might do with that stock—buy or sell it. The financial facts were largely overlooked. Ben Graham backed up the train. Before you throw money at a stock based upon nothing more than prevailing opinions, he argued, why not first figure out what it might be worth.

In the beginning, Graham's method was simple: Add up the company's current assets (account receivables, cash and securities), then subtract all its liabilities. That gives you the company's net worth. Then, and only then, look at the stock price. If the price was below the net assets, it was a worthwhile and potentially profitable purchase. But if the stock price was higher than the company's net worth, it wasn't worth investing. This approach fit comfortably into Warren's sense of numbers. Ben Graham had given him what he had been seeking for years—a systematic approach for investing: buy a dollar's worth of securities for 50 cents.

It has been said that for Warren, attending Columbia University was very much like the experience of someone emerging from a cave where he had lived all his life, stepping outside, blinking at the sunlight, perceiving truth and reality for the first time.¹¹ Warren relished every moment of the experience. When not in class, he could be found in the Columbia library reading old newspapers about the stock market going back 20 years. He never stopped, seven days a week from early in the morning to late in the evening. Most wondered if he ever slept. At the end of the semester, Warren received an A+, the first time Graham had ever awarded that grade in his 22 years at Columbia University.

When school was over, Warren asked Graham about working at Graham‐Newman, the investment partnership Graham managed while teaching at Columbia. Graham turned him down. Warren offered to work for free. Again, a polite no thank you. So Warren returned to Omaha, determined to see what he could do on his own.

He was just turning 21 years old.