Buffett: The Making of an American Capitalist

One line: Roger Lowenstein's Buffett biography — Ben's primary read for the first episode of the Berkshire trilogy, only the second time on the show the two hosts each read a different book.

Overview

Opening the episode, David thanks Alice Schroeder for The Snowball and asks Ben what he read; Ben names Buffett: The Making of an American Capitalist. David notes this is only the second time on the show they've each read a separate book (the first was the New York Times episode) — "we've got a few dozen other sources that we use for this as well, but we may have stories that one or another does not know about." The book's account of the Great Depression is quoted directly in the episode to explain why the market lost 90% of its value in the three years after Black Tuesday.

Why it's worth reading

Ben rates the book highly, arguing it lives permanently in The Snowball's shadow but shouldn't be underrated:

"Buffett: The Making of an American Capitalist, a great book by Roger Lowenstein. I thought this book was awesome. People talk about Snowball all the time as the sort of more popular Buffett biography. I thoroughly enjoyed this book, so I think you can't go wrong."

Explaining why the Depression was uniquely lethal, Ben relays the book's key insight — that even the smart money got wiped out:

"The way that it's described in Lowenstein's book, what was unique and remarkable about the Great Depression, was that even the smart money got wiped out. The people who realized things are cheap now the crash is over would buy, and even they lost all their money."

Ben uses that line as a counter to the "buy the dip" reflex: even those who correctly judged the crash was over and everything was cheap lost everything in the Depression.

Where it comes from

[acquired-berkshire-1] (the "sources" note at the top of the episode): Ben confirms this was his primary read and praises it highly. In the Black Tuesday section, Ben relays Lowenstein's account of the Depression wiping out even the smart money, used to explain the 90% loss of market value between 1929 and 1932 and why the Dow didn't recover its pre-crash high until 1954.