As markets tumble, everyone looks to Warren Buffet for cues. The world’s richest man has advice to go around but make no mistake, he is not your Daddy! Alice Schroeder, author of The Snowball: Warren Buffet and the Business of Life, discusses the man and the mythology.
Artist: Young Marble Giants
BROOKE GLADSTONE: In the second presidential debate this week, candidates McCain and Obama were both asked who they might name as treasury secretary. Both candidates, not surprisingly, mentioned Warren Buffet. The “Oracle of Omaha” is said to be the richest man in the world, and with the economy tanking, consulting the oracle seems to make good business sense. MALE CORRESPONDENT: But Warren Buffet is someone who, when he talks, the markets listen. FEMALE CORRESPONDENT: I mean, he’s always the man to follow in this kind of market. FEMALE CORRESPONDENT: - to get someone who is wiser than any of us on the markets. MALE CORRESPONDENT: Can you imagine anybody better? BROOKE GLADSTONE: But what’s he doing as the world waits? He’s shopping. He drove a hard bargain for a chunk of Goldman Sachs and then this week picked up three billion dollars’ worth of G.E. Main Street, the story goes, is angry with Wall Street fat cats who ruthlessly raked in the cash.
But nobody resents Buffet’s billions. It’s not part of the narrative. And nobody knows that narrative better than Alice Schroeder, formerly of Wall Street, now out with a massive book called The Snowball: Warren Buffet and the Business of Life. Alice, welcome to OTM. ALICE SCHROEDER: Thank you, Brooke. BROOKE GLADSTONE: So let's begin by listening to Warren Buffet on Charlie Rose. Basically here he’s giving the bailout what amounts to the Good Housekeeping Seal of Approval. [CLIP]: WARREN BUFFET: We have a terrific economy. It’s like a great athlete that’s had – that’s had a cardiac arrest, you know. And it’s, it’s flat on the floor and the paramedics have arrived and, you know, they shouldn't argue about whether they put the resuscitation equipment, you know, a quarter of an inch this way or a quarter of an inch that way, or they shouldn't start criticizing the patient because he [LAUGHS] didn't have blood pressure tests or something like that. They should do what’s needed right now. And I think they will, incidentally. I think the Congress will do the right thing. [END CLIP] ALICE SCHROEDER: I think the media has looked to him to play an official public role as some sort of job, and he doesn't want a job. He doesn't like to show up with regular hours or a schedule. So the talk of him becoming treasury secretary is nonsensical.
He thinks of himself as a teacher and advisor, someone who’s telling Americans what they need to know about the situation. But for Berkshire Hathaway shareholders, he’s strictly in it to make money. BROOKE GLADSTONE: [LAUGHS] You know, it’s funny, though, when you talk about him being a teacher, his quotables are rather oracular. You know, he said, “Only when the tide goes out do you discover who’s been swimming naked.”
And he also hates people who trade back and forth. He likes to hold onto stocks for a long time. So he said, “We believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.’” ALICE SCHROEDER: Yes, he thinks in little parables and he has great aphorisms, and that’s part of what’s made him so popular. And he’s somebody who does care about what happens to the United States and is very involved behind the scenes politically, but he doesn't invest altruistically. BROOKE GLADSTONE: He seems practically perfect in every way, just like Mary Poppins. ALICE SCHROEDER: Warren is a very complicated person, and there’s a separation between the tough, steely businessman, the dependent, needy person who needs a lot of support from people, and especially women in his personal life, and then the oracle who really is somebody who’s sought out by politicians and the media to give his wisdom in public during a time of crisis like this. BROOKE GLADSTONE: And he’s said to have two wives? What’s that story about? ALICE SCHROEDER: When his wife Susie moved to San Francisco in 1977, looking for a broader life, essentially she split the role of a wife with her friend, Astrid Menks. BROOKE GLADSTONE: [LAUGHS] Okay. You know, there was an interesting piece in The New York Times last weekend comparing Buffet to J.P. Morgan. Do you agree? Is he the Morgan of today’s crisis? ALICE SCHROEDER: Well, the roles that they're playing are very different. J.P. Morgan was more like the Hank Paulson. He directly brokered the bank solution to solving the panic of 1907.
Warren, first of all, is investing and making money off of this for Berkshire shareholders, but he’s also giving advice. And people have come to him and asked him to intervene directly on their behalf, for example, and go to the Treasury and lobby for – and he’s declined to do that. So he’s not playing a direct role. BROOKE GLADSTONE: Do you think that he’s the Rockefeller? ALICE SCHROEDER Well, Berkshire Hathaway, in some ways, his company bears a resemblance to the Rockefeller empire that was assembled in the early part of the century. And Warren’s partner Charlie Munger has referred to him as an “implacable acquirer,” much like John D. Rockefeller, who stopped at nothing to put together the company that acquired steel business after steel business, until it became this gargantuan enterprise. And Berkshire Hathaway bears some resemblance to that. BROOKE GLADSTONE: Maybe it’s just that the public is just so confused and so lacking right now in figures they can trust that they're desperate to invest everything they have in this one hugely successful businessman. Maybe they're trying to invest too much in Warren Buffet. ALICE SCHROEDER: What I've seen with Warren is that people like a very simple story of somebody who is grandfatherly and all knowing, and they tend to see him as the father figure they wish they'd had. And I think in a time like this, when people are very worried, that gets squared and cubed and, you know, taken to a higher power. BROOKE GLADSTONE: Alice, thank you very much. ALICE SCHROEDER: Thank you, Brooke. BROOKE GLADSTONE: Alice Schroeder is the author of the new book Snowball: Warren Buffet and the Business of Life. [WARREN BUFFET PLAYING THE ELECTRIC UKELELE] [MUSIC UP AND UNDER] Give it up for Warren Buffet on the electric ukulele, courtesy of YouTube.