Tuesday, 20 July 2010

Wisdom compromised

The Sages: Warren Buffett, George Soros, Paul Volcker, and the Maelstrom of Markets.

Author: Charles R. Morris
Publisher: Public Affairs
Ah, if only we could capture the intellect of financial geniuses in a book.


Only then will we be able to finesse our craft of investing, boost our confidence, harness positive energy and make killings in the stampeding environment of stock markets.

Best yet, if the approaches of these geniuses are poles apart.

We can then garner the best of each and excel midway, making us fearless yet grounded by reality and logic.

With that need in mind, Charles R. Morris puts together in his new book three sages, distilling distinctive investment styles of the two, and reminiscing the essence of one fine public servant.

But does profiling the lives of sages offer useful lessons for all of us?

Not really, if the sages are Warren Buffett, George Soros and Paul Volcker.

Much less so if the profiles make up of a series of quick recounts and lack in-depth analysis of the financial wisdom of these successful individuals.

Furthermore, while the life of the enigmatic Buffett is never tiring to read, his investment philosophies are more comprehensibly documented in Alice Schroeder’s Snowball.

Soros, meanwhile, has authored a number of books in which he offers more detailed descriptions of his trading methods and strategies.

The most well-known one being Soros’ magnum opus, The Alchemy of Finance, from which Morris, too, has quoted.

Morris, in a ham-fisted attempt to document the extraordinary life and career of Soros in slightly over 50 pages, has made Soros seem less of a sage than he deservingly is.

Although Morris regards Soros as a keen global trend reader with “feline sensitivity to quivers of disharmony in the economic flux”, his account of Soros’ trading history in quick succession and brief summation makes Soros looks more like a barbaric trader short of conviction and confidence.

On a few occasions, Morris makes it seem like Soros’ success comes more from luck than flair.
“My father changes his position on the market because his back starts killing him. It has nothing to do with reason,” Robert Soros is quoted as saying about his father’s investing intuition.

Morris’ inclusion of Robert’s comment offers little humour but reinforces Soros’ veering conviction.
In addition, Morris’ narrative of economic scenarios prevailing at the time is too swift and brief, confusing reader sthe least but disabling them from doing their own analysis the most.

“Without great conviction, (Soros) expects credit contraction. The stock market and house markets are both weakening, banks are in serious trouble and currencies are pushing against their upper bounds. On the positive side, the budget deficit is falling along with interest rates, and banks are slowly improving their balance sheets. What to do?”

Anyone will get lost in this economic scenario. Yet there are more.
Indeed, Morris’ impatience with economic theories is most obvious in the chapter on Paul Volcker, the man whom Alan Greenspan succeeded as former chairman of Federal Reserve.

Hoping to cover Volcker’s two-decade long career as an expert in monetary policies, Morris sails through the various economic conditions from which Volcker honed his lore, but remains short on specific attributes that make Volcker a man of implacable integrity.

The reader lapses into a trance of economic frenzy, hearing not the voice of a great man calming wave after wave of financial disruption, but the sound of screeching financial jargons that deafens anyone unfamiliar with the interlocking world of US economy and politics.

But the book does shine with its more personal portrait of Warren Buffett.
Morris focuses less on the technicality of financial markets but more on the young and endearing Buffett, when he achieved his first billion and his journey to become the beacon of sound judgement in the world of investment.

At over 900 pages, Alice Schroeder’s Snowball seems to have covered nearly everything that people want to know about Buffett.

But Morris is sensible enough to know his disadvantage and smart enough to have included a summary of Buffett’s witty anecdotes on Wall Street’s follies.

On the issue of accounting misrepresentation, Buffett quips and compares it with Abraham Lincoln’s riddle: “How many legs does a dog have if you call his tail a leg? The answer: Four, because calling a tail a leg does not make it a leg.’”

His failure and inability to walk the reader through economic wilderness notwithstanding, Morris has done a fair job in drawing these biographical sketches.

But sages have feelings, too.
A deeper look into their inner worlds may be more rewarding than the brief recounts that Morris has provided.

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