The man with the Midas touch

The perfect timing of this book rivals the brilliance of Warren Buffett’s many invest- ment coups. For years, this true ‘master of the universe’ has highlighted the dangers posed by derivatives — or ‘financial weapons of mass destruction’ in Buffett-speak. Losses from these highly complex instruments, based on sub-prime US mortgage debt, precipitated the credit crunch and now threaten the entire global financial system.

Presciently, Buffett warned in 2003 that derivatives could push companies into a ‘spiral that can lead to a corporate meltdown’. But Wall Street’s investment bankers ignored his advice, and while they now head for the pawnshops, the world’s greatest investor continues to accumulate wealth faster than anyone else in history.

Would-be billionaires worldwide, seeking the formula of Buffett’s financial alchemy, will doubtless pore over this biography, published with the co-operation and encouragement of the ‘Oracle of Omaha’. Yet this is not just the tale of how a small boy from Nebraska, unloved by his mother, came to be named by Forbes magazine as the richest man in the world. For, as Alice Schroeder, a former Wall Street analyst, told me in an interview before publication, ‘I uncovered layer upon layer of complexity’.

Buffett is certainly a man of contradictions. His personal wealth almost equals the entire GDP of Bangladesh. His holding company, Berkshire Hathaway, was valued at over US$200 billion at the end of 2007. Yet he lives in the same house that he bought in 1958 and, according to Schroeder, takes no pleasure in ‘visiting five-star resorts, collecting wine or art, or acquiring a trophy wife’. (‘I’ve never seen a trophy wife yet that looks like a trophy,’ he says. ‘To me, they always look like a booby prize.’). He prefers Cherry Coke, popcorn and peanuts to champagne and caviar.