How Does Warren Buffett Do It?

Books Worth Reading

December 2008 / January 2009 By: Rolf Dobelli Volume 6 Number 6

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The Panic of 1907

If you compare the 1907 crisis that struck U.S. and European financial institutions with 2008's economic emergencies, you will discover striking similarities. Strong interconnectivity between financial firms meant that trouble at one migrated to others. Both crises involved serious credit and liquidity concerns. Both provoked populist attacks against Wall Street. In part, the trusts hit trouble in 1907 because of insufficient regulation. The 1907 crisis started on Wall Street, and quickly jumped to European institutions. In 2008, the trajectory was even more global. Of course, marked differences also separate these episodes. In 1907, fabled financier J.P. Morgan exercised remarkable leadership to end the crisis, and to reassure depositors and investors that their savings and equity holdings were secure. Morgan calmed the waters so the panic would not spread. "This is the place to stop this trouble," he said of the Trust Company of America. Robert F. Bruner and Sean D. Carr explain why the 1907 panic occurred and use it as a valuable case study for understanding other monetary crises. getAbstract is confident that history lovers, businesspeople, financial executives and anyone who enjoys a well-told, real-life drama will love this book.

Robert F. Bruner and Sean D. Carr. The Panic of 1907: Lessons Learned From the Market's Perfect Storm. Wiley, 2007. List Price: $29.95. ISBN-13: 978-0470152638.

The Snowball

Warren Buffett is "everyman" as multibillionaire. Despite his vast wealth, he has always eschewed ostentation. He pays himself about $100,000 annually, which in today's U.S. economy places him in the upper-middle-class. He lives in the same simple Omaha house that he bought in 1958 for $31,500. He prefers an old gray suit to expensive London tailoring. In Buffett's early days, when he was only a multimillionaire and not a multibillionaire, he walked around with holes in the soles of his shoes. To Buffett, wardrobe doesn't matter; what matters is making money. He is better at this pursuit than anyone else in the world. In 2008, Forbes magazine ranked him as the globe's richest man, with a net worth of $62.3 billion. Author Alice Schroeder does a masterful job of chronicling Buffett's improbable, inspiring life. As a former research analyst, Schroeder uses her expert knowledge of finance and commerce to detail Buffett's investment philosophy and business activities. Her book is packed with fascinating details and trenchant observations about the "Oracle of Omaha." One of the best business biographies available, this book shows how the world's greatest investor amassed the world's greatest fortune, while staying true to his essential self.

Alice Schroeder. The Snowball: Warren Buffett and the Business of Life. Bantam, 2008. List Price: $35.00. ISBN-13: 9780553805093.

Talent on Demand

If you don't know what products or services your company will need in five years, how can you know how many staff members you will need? Talent management, like every other aspect of business, has changed so dramatically that decision makers aren't sure where to turn. For years, corporations used "traditional succession plans" to ensure smooth leadership transitions. Those plans are no longer effective. Hiring from the outside, a trend that once rapidly gained popularity, did not turn out to be a panacea. Author Peter Cappelli believes companies cannot eliminate unpredictability—€”they can only contain it. He finds that supply chain management approaches can cut the expense and boost the effectiveness of talent management. The key to managing talent, he says, is reducing your exposure to risk and being responsive to your employees. You may not find a complete solution to your future leadership issues here, but getAbstract believes Cappelli's approach is a significant step forward.

Peter Cappelli. Talent on Demand: Managing Talent in an Age of Uncertainty. Harvard Business Press, 2008. List Price: $35.00. ISBN-13: 9781422104477.
Rolf Dobelli is chairman of getAbstract, a leading provider of business book summaries, with more than 4,500 titles covered. www.getabstract.com.