Author Vahan Janjigian hits the mark in his title, Even Buffett Isn’t Perfect, What You Can – And Can’t – Learn From the World’s Greatest Investor (2008, Portfolio, Penguin Group, 237 pages).
Super-investor Warren Buffett, long one of the world’s richest individuals, isn’t perfect. Like everyone else, he could do better at work, in his case as the boss of Berkshire Hathaway in the United States.
Yet he’s hard to fault. “Buffett took control of Berkshire in the 1960s and eventually transformed it from a textile company into an investment company. During his reign as CEO, he made a fortune for himself and his shareholders.”
Buffett’s popular too. “Despite his tremendous wealth and intelligence, he comes across as an ordinary Joe. People love his extraordinary ability to exercise common sense, his self-depreciating humor, and his almost complete lack of ego. Buffett is a cross between Albert Einstein and Andy Griffith’s Sheriff Taylor from the 1960s television series. You can’t help but admire him, respect him, and like him a whole hell of a lot.”
After searching diligently, what flaws did Janjigian find? Buffet’s alleged sins include supporting substantial taxes for the rich, being reluctant to sell shares, missing a bonanza in the ‘90s tech-stock boom and disparaging the release of projected earnings.
Interesting and insightful, the book isn’t perfect either. Its premise is that “by studying Buffett objectively, you can learn what works and what doesn’t in most circumstances”.
But Buffett knows the most about his own business deals. Although Janjigian did extensive research, there’s no hint that he interviewed his subject.
Even this short book has too much repetition. At times, it’s like a textbook using one person in every example. Later there’s a review of “what we have learned”.
Nothing like a biography, the book sticks to judging business tactics. Buffett likes to buy shares in under-valued, well-led companies and then wait patiently, maybe decades, as value builds. He hesitates to meddle in daily business, but will if needed. It’s little more than common sense.
One chapter details Buffett’s “worst” investment decisions – involving Salomon Inc, General Re, NetJets and Pier 1 Imports. “The purpose of doing this is not to embarrass the man. Indeed, given his investment record, embarrassing Buffett is nearly impossible. He has absolutely nothing to be ashamed of. Readers should understand, however, that sometimes there is as much to learn from an outstanding investor’s mistakes and failures as there is from his successes.”
Even Buffett’s worst deals often turn out alright. “Like everyone else, Buffett hates to make mistakes. Unlike everyone else, however, he has a real knack for making lemonade out of lemons. When Salomon Inc looked like it was going to blow up, Buffett stepped in and saved the day. When General Re started to disappoint, Buffett initiated a management shakeout that put the company back on the right track…. Even NetJets, which struggled for years, may eventually prove to be a resounding success. Buffett simply refused to give up on these companies.”
Jinjigian does best when offering his own advice: “When it comes to investing, mistakes can be costly indeed. But you can learn quite a lot from your mistakes. Naturally, people prefer to forget their mistakes because they bring painful memories. Investors, however, should embrace their mistakes. When you make a mistake, as you inevitably will, do not try to purge it from your mind. Instead, burn it into your memory so you will never forget it.”
A resident of Rye Brook, New York, Jinjigian usually writes and edits high-profile investment newsletters. He concedes that many other books deal with Buffett too.
Alas, the ending merely tells readers what they already knew. “Based on the evidence, it is certainly fair to conclude that Warren Buffett is one of the greatest investors – if not the greatest investor – of all time.”
Yet Even Buffett Isn’t Perfect may redeem itself with useful insight into how a super-investor operates and whether mere mortals can imitate him. Most readers should emerge as better investors too.
Approval rating: 61 per cent.
For more information: www.penguin.com
(May 17, 2008)
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