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"I am not a reader, I am a writer" - so goes the punchline to an old Russian joke about a reindeer herder who is applying to study philology at the Moscow State University. Well, I can certainly relate: reading is difficult for me, writing - a breeze. Given a choice, I substitute the reading of big tomes like Leo Tolstoy's mega drama War and Peace for its Cliffs Notes version.

It's not that I don't want to read Alice Schroeder's "The Snowball: Warren Buffett and the Business of Life" - I do, but the sheer weight of that book's 976 pages scares the daylights out of me. Why couldn't Alice just spend the time to digest her story into something more palatable to an average Joe, I thought. Bud Labitan must have read my thoughts, because a few days later I received an email from him telling me about his new book on Buffett and Munger.

I had no idea who Bud was, but was so impressed with his mind reading skills, that I told him that I would review his book, if he sent it to me. He did and about a week later the book was in my mailbox. Yesterday, I was stuck at my desk for most of the day and so, finally, got a chance to read it...

To fairly evaluate a book, one must first determine who its target audience is. So, my first challenge in reading Labitan's book was trying to figure out who it was written for. Was it intended for a novice or an expert? Is it a guide to a novel investment process, an introduction to value investing in general, or, perhaps, a personal historical overview - a biography of sorts?
The Four Filters Invention of Warren Buffett and Charlie Munger (Two Friends Transformed Behavioral Finance)
On the one hand, many terms used in the book are not first properly defined, on the other, the concepts presented are rather basic and examples pull numbers out of a virtual hat. Some personal stories from Buffet's and Munger's life are retold, but they were not selected for their heartwarming qualities and these retellings are so heavy in quotes that they fail to engage. In fact, the book relies on quotes so much (there are 124 of them, more than there are pages of content) that it makes you wonder if what you are reading is not, in fact, a report for a business class Bud took at Purdue.

In addition to quotes, the book is also heavy in name dropping. The two names most overused in the book are that of Benjamin Graham of the "used cigar butt" investing fame and Philip Fisher, a pioneer growth investor, who emphasized quality. Names of Phil Carret, John Burr Williams, Lou Simpson, Jack Byrne and Charles Mizrahi, among others, get heavy use, as well. The one name that doesn't get enough mention is that of Rose Blumkin. Mrs. B. (born Rose Gorelick outside Minsk, Russia in 1893) started Nebraska Furniture Mart in 1937, sold a majority share to Buffet in 1983 and was still involved in day-to-day operations until shortly before her death at the age of 104 - she is a legend!

Along with names of important people, the book prominently features names of businesses whose stock Buffett's Berkshire Hathaway owned over the years. Of course, GEICO, Coca Cola, Gillette and Kraft Foods make the requisite list. But in the end, the book simply boils down to rehashing and restating Buffett's investment philosophy of buying "at sensible prices of businesses that have good underlying economics and are run by honest and able people" ad nauseum.

If you savor every written word and are looking for a well written, properly edited and nicely formatted volume - this self-published booklet is not it. If you are interested in a comprehensive biography of Buffett and Munger - look elsewhere. If you are looking for "an amazing Behavioral Finance Formula" advertised on the book's back cover - you will not find it here. But, if you, like Bud, think that the main purpose of a glossary is to add pages, even if it is of terms never used in the book - this is the book for you!

Despite all this, I did find some value in the book. Labitan, obviously, spent time studying Buffett and Munger and was able to pull many relevant quotes from Berkshire Hathaway Annual Stockholder Reports as well as from several other sources. The book is no substitute for Cliff Notes on Alice Schroeder's Snowball, but it is short and if skimmed to skip the many repetitions and ignore the few available details that are incomprehensible anyway, can provide a quick introduction to the subject of value investing as practiced by Buffett and Munger.

Now, Alice, can I have a Snowflake?

 The Four Filters Invention of Warren Buffett and Charlie Munger (Two Friends Transformed Behavioral Finance)


Thanks for a balanced and critical review. The Buffett and Munger innovation was in how they "framed" their investing decision before making it.

The liberal use of quotes (which Mr. Buffett approved) was intentional... so that the reader would feel that he was listening to Buffett and not the author Labitan.

I tried to hide my own biases; but a little leaked out in the SOAP process described in chapter 3. The intent there was to show the reader that we can form a general impression of managers using both feelings and facts... using both subjective and objective data.

Here is an old audio clip of Mr. Buffett mentioning the 4 decision filters:

I think the key to appreciating the filters as I do, is to imagine what each of the 4 clusters really represent.
1. Develop an understanding of the economics of the business and its products. 2. SCA is really about Customers. 3. ATM, Able and Trustworthy Managers and 4. Ben Graham's Margin of Safety by buying below Intrinsic Value.

If we give credit to Ben Graham for filter four; then the real advance of the Buffett+Munger collaboration is in "U+SCA+ATM."

Here is an audio that hints at their "growth" in learning towards finding the "wonderful business."

I hope this explanation helps your readers appreciate their innovation of combining 3 qual steps with 1 quant step... in order to have a higher probability of a better outcome.


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