Buffett and the Financial Crisis: A Mixed Bag of Results

In a recent update made to her best selling book The Snowball: Warren Buffett and the Business of Life, Alice Schroeder has added a new 31 page section that outlines both the positives and negatives of Warren Buffett’s handling of the recent financial crisis.

Although Buffett became a public symbol of prudence during the crisis, Schroeder also details some of his moves that potentially made Berkshire a weaker company financially. In an excerpt from the new book section posted on CNBC.com, Schroeder discusses how Buffett’s public role during the crisis may have hurt his business performance. According to Schroeder “He filled the role of America’s statesman and father figure during the financial crisis, but he had also fallen into the trap of competing for attention instead of trusting that his sterling record would bring it to him.” Schroeder also discusses Buffett’s exposure to Financial companies and his sale of index puts, both of which she says played a major role in the loss of Berkshire’s AAA credit rating, as well as his purchase of a convertible stake in Swiss Re, which raised many eyebrows given that it was General Re’s largest competitor.