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12 September 2017 Financial Analysts Journal Book Review

Tap Dancing to Work

Warren Buffett on Practically Everything, 1966–2012

  1. Ronald L. Moy

This enjoyable collection of articles about and by Warren Buffett gives readers the opportunity to learn about his business achievements. Even seasoned readers who have tracked Buffett’s career for decades are likely to find enough new material to pique their interest.

Over the past three decades, numerous books have been written about investment icon Warren Buffett. There have been biographies, books on his investment strategy, books devoted to his quotations, and books that simply put Buffett’s name in the title to increase sales. When confronted with Carol J. Loomis’s foray into the world of Buffett— Tap Dancing to Work: Warren Buffett on Practically Everything, 1966–2012 —one must ask whether there is anything new to add.

Loomis has collected numerous articles about Buffett published in Fortune (where she is a senior editor-at-large), including many of her own. The volume also contains excerpts from Buffett speeches, letters to shareholders, and transcripts of interviews. At first glance, this may seem like the easy way out—just another author cashing in on the public’s fascination with Buffett. Loomis has managed to create a book while doing only a minimal amount of writing.

In the preface, Loomis explains her approach. Noting that she is the chief writer about Warren Buffett at Fortune and a longtime friend, she comments that “a writer who is a good friend of the subject does not make a good biographer. . . . Then it dawned on me that the scores of Buffett articles we have published in Fortune are in themselves a business biography.” The magic of the book is that the articles, written over many years, represent how the authors viewed Buffett at the time the articles were penned. A writer who sets out to produce a biography will often choose to interview the subject’s friends, family, and colleagues in order to go back in time to understand what the subject was like in the past. What the biographer cannot do is eliminate bias that comes from awareness of the subject’s present stature and knowing how the subject’s insights actually turned out. The author of a book about Enron Corporation or WorldCom is well aware of “how the movie ends,” and so the tone of the narrative tends to be decidedly negative. However, the archives of respected business publications abound in articles that sang the praises of those same companies before they fell from grace. In a similar vein, Warren Buffett has long since become a revered figure in the world of business and investing, but in 1966, he was a relatively unknown money manager from Omaha, Nebraska.

Loomis, who provides commentary preceding many of the items, has put together an eclectic collection of pieces by or about Buffett. The book is organized chronologically within topics, giving the reader the opportunity to follow a topic in compressed time. Interestingly, the first article in a book about Buffett is not about Buffett; it is about another money manager, Alfred Winslow Jones, noted for coining the term “hedged fund.” Loomis begins with this piece because it represents the first time Fortune ever mentioned Buffett (in fact, the article mentions only his partnership). So obscure was Buffett that the magazine left off a t in his name.

Seventeen years later, in 1983, as Buffett’s annual chairman’s letter was beginning to attract some attention, Fortune decided to write about the letters in what would become a sort of book review of Buffett’s works since 1977. Because Loomis was by then a friend of Buffett’s and the unofficial editor of the letters, Fortune turned to an unknown freelance writer, Andrew Tobias, to write the article. Even more interesting than Tobias, who would go on to a very successful career as a financial journalist, is the fact that when Tobias was contacted about doing the piece, he admitted that he had never heard of Buffett. Today, it seems as though everyone claims to have known of Buffett’s investment prowess back in the 1950s. But even in the early 1980s, when Berkshire Hathaway stock could be purchased for less than $1,000 a share, 1 many people in the world of finance were still unaware of Buffett.

Loomis also includes the first piece that Buffett wrote expressly for Fortune , in 1977, “How Inflation Swindles the Equity Investor.” She notes that Buffett and Fortune still receive letters about it. Here, we get not only a close look at Buffett’s early insights into the economy but also confirmation that he is fallible. Two of Buffett’s predictions proved incorrect: He foresaw neither Paul Volcker’s engineering of the end of runaway inflation nor the drop in corporate tax rates in the ensuing decades.

The articles that Loomis has selected for the book allow the reader to see the many sides of Buffett. One piece by Bill Gates, originally published in the Harvard Business Review and later reprinted in Fortune , is a review of Roger Lowenstein’s Buffett: The Making of an American Capitalist that morphs into Gates’s impressions of Buffett. Because of their friendship, Gates is able to provide some unique stories and insights about his friend. Little did Gates know that a decade later, Buffett would pledge the bulk of his vast fortune to the Bill & Melinda Gates Foundation.

In addition to the many articles about Buffett, Loomis has included transcripts from several interviews and discussions with him, including two Q&A sessions with Buffett and Gates. The first took place at the University of Washington in 1998. Aired by PBS, it provided students an opportunity to see the United States’ best-known billionaires interacting on a range of topics. One of the more interesting comments came from Gates in response to a question regarding mergers: “It doesn’t make much sense to have so many banks in this country.” Would he have made the same remark a decade later?

A fascinating piece that some Buffett aficionados may not be familiar with is Buffett’s 2003 article with Loomis on his solution to the U.S. trade deficit problem. He proposed issuing to every U.S. exporter an import certificate in an amount equal to the dollar amount of its exports. These certificates could then be sold to exporters from abroad or to importers in the United States to enable them to import goods into the United States. Buffett’s solution never gained much traction, although he still believes the concept has merit.

One article for which the outcome has yet to be determined is “Buffett’s Big Bet,” which concerns a wager with New York asset management firm Protégé Partners that runs for 10 years, from 2008 to 2017. The wager pertains to whether a low-cost index fund (Vanguard’s Admiral Shares) will outperform a portfolio of five hedge funds of funds chosen by Protégé. Buffett is on the side of the low-cost index fund, betting that it will outperform over the period given the high management fees imposed by the funds of funds. As of the book’s publication, the two were in a virtual dead heat.

One of the last articles in the book is not about Buffett but about his son Peter, an Emmy Award–winning musician and composer, and the success in China of his 2010 book Life Is What You Make of It . This inclusion marks a break from previous books on Buffett, which make little mention of his children.

In Tap Dancing to Work , Carol Loomis has assembled an enjoyable collection of articles about and by Warren Buffett. In some cases, she has included only excerpts, but readers can view them in their entirety online. In addition to the conventional articles about Buffett that one would expect to see, Loomis has included a couple of amusing pieces on whether Jimmy Buffett and Warren Buffett are related and one on Buffett’s FICO credit score. The book gives readers new to Buffett the opportunity to learn about his business achievements. Even seasoned readers who have tracked Buffett’s career for decades are likely to find enough new material to pique their interest.

Does the world really need another book about Warren Buffett? The answer is yes if it is Carol J. Loomis’s Tap Dancing to Work .


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