The Essays of Warren Buffett: Lessons for Investors and Managers
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- Author：Lawrence A. Cunningham
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Summary
An updated edition of the bestselling collection of timeless wisdom from the world's greatest investor Readers of Warren Buffett's letters to Berkshire Hathaway shareholders have gained an enormously valuable informal education in the art of investing。
Reviews
Kristoffer
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Among many interesting topics covered in Buffett’s essays， I found the first chapter on corporate governance the most valuable read。 Here Buffet addresses the importance of having managers that think like owners in making business decisions。 They are stewards of shareholder capital。 He gives straightforward suggestions on how managers should communicate to investors， think about allocation of capital and resist the institutional imperative。
Guilherme Menezes Varela de Araújo
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Simple and pure perfection。This book is a complete lesson about investing， from what to look for in an investment， to diversification， to corporate governance and purpose of options compensation。 It's a MUST， alongside Ben。 Grahams' Intelligent Investor/Security Analysis， Common Stocks Phil。 Fisher， One Up Wall Street from P。 Lynch and Earnings Quality from Thornton O'Glove。 Simple and pure perfection。This book is a complete lesson about investing， from what to look for in an investment， to diversification， to corporate governance and purpose of options compensation。 It's a MUST， alongside Ben。 Grahams' Intelligent Investor/Security Analysis， Common Stocks Phil。 Fisher， One Up Wall Street from P。 Lynch and Earnings Quality from Thornton O'Glove。 。。。more
Cian
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The best source of education on business and investment that there is has been given in Berkshire Hathaway's annual reports which Cunningham has put together conveniently for the reader。 The best source of education on business and investment that there is has been given in Berkshire Hathaway's annual reports which Cunningham has put together conveniently for the reader。 。。。more
Farming Lord
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This is like the golden collection of advice。 Sir Buffet is a father of investing for many people， he set a trend on Investing in Index Funds for the sake of proper diversification and right portfolio management。 Moreover， much of his advice is applicable not only to Stock Market but to the Decentralized Finance field as well。 OG。
Apurv
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While I couldn't understand some of the stuff， still found the book to be an insightful one。 While I couldn't understand some of the stuff， still found the book to be an insightful one。 。。。more
MJ
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Priceless and timeless investing and life lessons。 WB is truly a once every century investing legend。
Massimo Morelli
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What Buffett writes is at the same time important and easy to understand。 He calls BS when he sees it。 The book would have been better with some editing， because B。 wrote about each topic over and over and over， and the different pieces are simply collected together， so there are a lot of repetitions。 Anyway， the book is full of invaluable wisdom， even for those of us who do not have money to invest。
Marcelo
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Book with advices from the best investor of all time。 I'm sure it will be hard to understand for the people who are beginner on the stock market！ The content is advanced and of high value Book with advices from the best investor of all time。 I'm sure it will be hard to understand for the people who are beginner on the stock market！ The content is advanced and of high value 。。。more
Paulo Cardoso
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Lots of experience and lessons to be taken from this book。 Gets the most important information well the Berkshire reports
Stefan Bruun
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An impressive and structured walkthrough of many of the lessons from Berkshire's letters to its shareholders。For anyone without the patience or time to read through all of the letters， this book provides a great overview structured and divided into topics across letters。 An impressive and structured walkthrough of many of the lessons from Berkshire's letters to its shareholders。For anyone without the patience or time to read through all of the letters， this book provides a great overview structured and divided into topics across letters。 。。。more
HELEN ZHANG
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Some interesting material and well written， but not for the everyday person who wants some financial advice since it can get pretty technical
N
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Pg 33: our long term objective is to maximize per share intrinsic valuePg 36: deferred tax liabilities bear no interest。。。liabilities without covenants or due dates （I。e。 insurance） have the benefit of debt without the drawbacks。Pg 37: We don't want to sell sub par businesses as long as we expect them to generate some cash and as long as we are comfortable with labor relations and management。Pg 38: unintelligible footnotes usually indicate untrustworthy management -- be wary of companies that tr Pg 33: our long term objective is to maximize per share intrinsic valuePg 36: deferred tax liabilities bear no interest。。。liabilities without covenants or due dates （I。e。 insurance） have the benefit of debt without the drawbacks。Pg 37: We don't want to sell sub par businesses as long as we expect them to generate some cash and as long as we are comfortable with labor relations and management。Pg 38: unintelligible footnotes usually indicate untrustworthy management -- be wary of companies that trumpet earnings and growth projections。Pg 54: we give our managers simple mandates: run it like you own 100% of it （and the only asset you own） and as if it were to last a century。 Also don't let accounting get in the way of sound business judgment。Pg。 60: don't throw good money after bad and simply exist businesses that aren't working rather than try to repair themPg 81: auditors should ask these questions:1。 If auditor himself were to prepare statements what would he have reported differently （both material and non-material differences）。 2。 If auditor were an investor would he have received in plain English the information essential to understanding the company's performance3。 Is the company following the same internal audit procedure that would be followed if the auditor himself were CEO？ What are the differences and why？4。 Is the auditor aware of any actions - either accounting or operational that have had the purpose and effect of moving revenues or expenses from one period to another？Pg 90: evaluating arbitrage1。 How likely is it that the promised event will occur？2。 How long will your money be tied up？3。 What chance is there that something still better will transpire？ E。g。 Competing bid 4。 What will happen is the event does not take place because of anti-trust action， financing hiccups， etc。Pg 106: our goal is to find an outstanding business at a sensible price， not a mediocre business at a bargain price。Pg 110: the best business to own is one that over a long period can employ large amounts of incremental capital at very high rates of return。 The worst are ones that have high capital needs at very low rates of return。Pg 116: loss of focus is what most worries Charlie and me when we contemplate investing in businesses that in general look outstanding。Pg 121: time is the friend of a wonderful business and the enemy of a mediocre one。Pg 123: we've never succeeded in making a good investment with a bad personPg 177-178: restricted earnings are seldom valueless to owners but they must be discounted heavily: for every dollar retained by corporations at least one dollar of market value will be created for owners if the capital retained produces incremental earnings equal to or above those generally available to investors。Pg 197: companies best suited for an inflation environment are ones with an ability to increase prices easily without fear of loss of market share/unit volume and an ability to accommodate large dollar volume increases in business with only minor additional investment in capital。Pg 228: quirk: owning 50%+ of a company means you report revenue and expenses of subsidiary。 If 20-50% just report the net income share。Pg 237-238: Any unleveraged business that requires some net tangible assets to operate is hurt by inflation。 Businesses with few tangible assets are hurt the least。 He uses the See's vs manufacturer example。 See's earns 2mio on 8mio of asset vs manufacturer with 2mio of earnings on 18mio of assets。 In inflationary world they need to replace assets at double the price （16mio vs 36mio）。 For every new dollar invested only one dollar of value was created for the manufacturer while for See's an incremental dollar invested created four dollars in value。Pg 238 Any unleveraged business that requires some net tangible assets to operate is hurt by inflation。 Businesses needing little in the way of tangible assets simply are hurt the least。WM: I don't know that's really dependent on inflation。 Deflation benefits asset heavy companies？Pg 240: In analysis of operating results - that is in evaluating the underlying economics of business unit -- amortization charges should be ignored。Pg 250: Are there tax advantages to buying companies will large goodwill （so you can write off phantom amortization）？Pg 291: Tax code makes Berkshire's owning 80% or more of a business far more profitable for us than owning a smaller share。 When a company we own all of earns $1mio after tax， the entire amount injures to our benefit。 If the $1mio is upstreamed to Berkshire we owe no tax on the dividends。 And if the earnings are retained and we were to sell the subsidiary - not likely at Berkshire - for $1mio more than we paid for it， we would owe no capital gains tax。 That's because our tax cost upon sale would include both what we paid for the business and all earnings it subsequently retained。 A lot of stupid baseball analogies about investing （high batting average arguments）。 This is a terrible analogy because not all swings cost the same and if properly risk managed then you can do well with a terrible batting average but high skew in returns （e。g。 Soros）。 "Striking out" is not proportional to the number of swing taken。 This sort of advice has hurt me much in life。 Like Bezos says， you should proceed while you have an imperfect understanding because if you wait for the high level of confidence the opportunity has likely been missed。Also a lot of nonsense about wanting businesses that have market values dropping below intrinsic value。 This is an absurdity in the real world。 As he says on page 85 "we will sell a security that is fairly valued or even undervalued because we require funds for a still more undervalued investment or one we believe we understand better。" Indeed what you want is fast mean reversion and an abundance of opportunities。 You don't want nonstop MTM losses。 In fact you should consider the possibility that you're wrong and the market is right （ever more likely as MTM losses mount）。 So this investing aphorism is pure stupidity。He also goes on to condemn debt etc when his whole empire is predicated on insurance float。 That's LEVERAGE。On long term compounding he's relying on the experience of the US - the most successful country of the last two centuries。。。but would it be wise to be a long term passive holder of Russian and Chinese stocks before the red revolutions？ 。。。more
Dhyey Desai
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This book gives a good insight in to the mind of Warren Buffett and his investing philosophy， creating Berkshire into an institution that would survive the test of time。 Lawrence Cunningham has gone through the annual letters that Buffet releases as part of his annual report， picked and arranged them by topics to make it easy to read。 As is always the case， the investor does not give any insight into the actual calculations that are involved in evaluating an investment opportunity but rather thi This book gives a good insight in to the mind of Warren Buffett and his investing philosophy， creating Berkshire into an institution that would survive the test of time。 Lawrence Cunningham has gone through the annual letters that Buffet releases as part of his annual report， picked and arranged them by topics to make it easy to read。 As is always the case， the investor does not give any insight into the actual calculations that are involved in evaluating an investment opportunity but rather things to watch out for when considering an investment。 The Berkshire system that Buffett has created is something that is anachronistic。 It is a set of ideals and values that if America。inc followed， would create a far better world。 His letters should be a required reading to all the MBA cohorts before they embark on their managerial pursuits。 。。。more
Lord Zion
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If there is a God for investors， it must be Warren Buffett。 Reading this book， his love for his work and his knowledge are there to behold。 His common sense approach to investment has clearly worked in his favour and， as this book is essentially a collection of his yearly reports to holders of Berkshire Hathaway stock， his humour and hubris is also ever-present。Of course， we would all benefit from buying Coca-Cola stocks in the 1950s and， to a large extent， he is a product of his time， benefitin If there is a God for investors， it must be Warren Buffett。 Reading this book， his love for his work and his knowledge are there to behold。 His common sense approach to investment has clearly worked in his favour and， as this book is essentially a collection of his yearly reports to holders of Berkshire Hathaway stock， his humour and hubris is also ever-present。Of course， we would all benefit from buying Coca-Cola stocks in the 1950s and， to a large extent， he is a product of his time， benefiting from post-war economic booms along with a much more measured approach to investing overall。Most of the essays are from the 80s and 90s so， although nice to read for nostalgia， largely irrelevant today。 I would posit that attempting to trade like Buffett in 2020 would be tricky。 Computer algorithms did not exist back then and their whims seem to dictate the price of stocks and shares as much as large corporate investors。Having said that， he is a good writer and it is always nice to be in the presence of someone with a brain much bigger than your own。 There is something to learn from this book - more so if you are a buy-and-hold investor - so worth a read if the subject is of interest。 。。。more
Matt Stawarz
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Very simple concept: a curated collection of many of Warren Buffet's 'essays' （many are from Berkshire annual reports etc。 rather than essays per se）。 Logically ordered and well selected。 Would be great if this book got updated every few years！ Very simple concept: a curated collection of many of Warren Buffet's 'essays' （many are from Berkshire annual reports etc。 rather than essays per se）。 Logically ordered and well selected。 Would be great if this book got updated every few years！ 。。。more
Ravij Reagen
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My Personal ExperienceWhat better to learn from the Richest Investor than from his book？ The Essay of Warren Buffet consists of the collection of the shareholder letters that Warren Buffet provides in the Berkshire Hathaway meetings。Buffet urges us to buy a great business at a sensible price， rather than a mediocre business at a bargain price。 The mediocre companies might be a lot cheaper， but you will have to buy many such companies before one of them brings you a good profit。 Moreover， don’t d My Personal ExperienceWhat better to learn from the Richest Investor than from his book？ The Essay of Warren Buffet consists of the collection of the shareholder letters that Warren Buffet provides in the Berkshire Hathaway meetings。Buffet urges us to buy a great business at a sensible price， rather than a mediocre business at a bargain price。 The mediocre companies might be a lot cheaper， but you will have to buy many such companies before one of them brings you a good profit。 Moreover， don’t diversify too much！ It takes way too much time。 Diversifying comes from not knowing what’s going to happen。 If you don’t understand the business， then don’t buy its stocks at all。 Only stick with the businesses that you understand。 It’s also not enough to buy businesses based on just their financial numbers。 You have to make sure these companies have great management as well。 Likewise， while most of us fear stock market fluctuations， Buffet thinks otherwise。 When the market goes down， it provides greater buying opportunities than it was possible earlier。 If you would like to read more， then please visit https://proinvestivity。com/2020/04/25。。。 。。。more
Val
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It is very interesting to see what Buffet says in his essays。 You can learn a lot of new things about business and money
Parth Belani
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Warren Buffett， as the Chairman of Berkshire Hathaway， writes annual letters to the shareholders of the company along with the annual reports。 Over the years， these letter have been a great source of investment knowledge， not only for the Berkshire shareholders， but for the investors world over。This book is a topic-wise collection of scripts of Buffett's letters。 He has collated the teachings of Buffett in sections like， corporate governance， finance & investing， accounting， common stocks， taxes Warren Buffett， as the Chairman of Berkshire Hathaway， writes annual letters to the shareholders of the company along with the annual reports。 Over the years， these letter have been a great source of investment knowledge， not only for the Berkshire shareholders， but for the investors world over。This book is a topic-wise collection of scripts of Buffett's letters。 He has collated the teachings of Buffett in sections like， corporate governance， finance & investing， accounting， common stocks， taxes， mergers & acquisitions etc。 These section are then further divided into subsections。 Such topic-wise collection makes it easier for the reader to understand Buffett's philosophy。 Although the letters （available on the Berkshire's website） are more preferable， they are very lengthy。 This book is the next best alternative。 。。。more
Abhisheka Jhunjhunwala
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To get an in-depth view into the investing philosophy of the Oracle of Omaha， this book is a very good collection of his essays。 Lawrence Cunningham has organised them in good order so that one can choose which chapters to read depending on one's topic of interest。The book covers not just equities， but other financial instruments as well - M&A， Valuation， Accounting Shenanigans to name a few， and on each subject Buffett gives his unique views。As opposed to a university course， here is content th To get an in-depth view into the investing philosophy of the Oracle of Omaha， this book is a very good collection of his essays。 Lawrence Cunningham has organised them in good order so that one can choose which chapters to read depending on one's topic of interest。The book covers not just equities， but other financial instruments as well - M&A， Valuation， Accounting Shenanigans to name a few， and on each subject Buffett gives his unique views。As opposed to a university course， here is content that someone who has actually lived through different economic cycles， and made investment decisions （mostly successful ones）， has written about。 In my opinion， this book carries a lot of valuable content （Weighted Average Cost of Content maybe？）。The book covers ALL aspects of corporate finance， and Buffett further explains concepts using very simple analogies - for students of university corporate finance courses， his essays could actually clear up a lot of foggy concepts！ （it worked for me）The tax section is not really relevant to non-US readers but his logic is useful if you can absorb it。 I would also have preferred if there were more recent essays in the book。 。。。more
Luc
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"Be fearful when others are greedy and be greedy when others are fearful。" "Be fearful when others are greedy and be greedy when others are fearful。" 。。。more
Jonathan Lomas
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I read this immediately after finishing the 1965-2014 Berkshire Hathaway shareholder's letters， and it was wonderful to read it all again organized thematically; such a different experience than the 'dear diary' experience of the chronological shareholder's letters。 I read this immediately after finishing the 1965-2014 Berkshire Hathaway shareholder's letters， and it was wonderful to read it all again organized thematically; such a different experience than the 'dear diary' experience of the chronological shareholder's letters。 。。。more
Roy Chua
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This review has been hidden because it contains spoilers。 To view it， click here。 The whole book was a joy to read but I would imagine it being tough to read for a person who have little background in investments/finance。I especially enjoyed Buffet thoughts good managers and good corporate governance。 It was something I rarely picked out from other investment related books。 Throughout his letters he emphasised heavily on buying quality businesses at a fair price （not necessarily cheap） and ran by great people。 This I thought was really fundamental， but ignored by so many inve The whole book was a joy to read but I would imagine it being tough to read for a person who have little background in investments/finance。I especially enjoyed Buffet thoughts good managers and good corporate governance。 It was something I rarely picked out from other investment related books。 Throughout his letters he emphasised heavily on buying quality businesses at a fair price （not necessarily cheap） and ran by great people。 This I thought was really fundamental， but ignored by so many investors themselves。I hope business/accounting schools around the world put more emphasis into his words。 。。。more
May Ling
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The accounting and valuation。。。Accounting and tax topics are lost on me。
Sarah Elizabeth
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May have to revisit this book down the road。 I enjoyed learning about Buffet’s business philosophy and methods。 However， a good deal of the material went over my head。 Especially all the accounting。
Sumeet Shah
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This book is a must read for anyone who is looking to enter value based investing as well as understand how to find good businesses and how the businesses run long term。The essays basically helps us understand the thought process behind Warren Buffett and what made him reach this Peak in the Investing world and the world of business acquisitions。
Myles
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Although I have no formal background education or professional training in business or finance this collection has elevated my financial literacy as measured against peer-based discussions with a Senior Financial Analyst at a major commercial banking institution， a former Solomon distressed assets broker， and my general reading comprehension of business sources such as Motley， WSJ， Financial Reports， and more。 In sum， Buffet's financially conservative， honest， owner-oriented， likeable-admirable- Although I have no formal background education or professional training in business or finance this collection has elevated my financial literacy as measured against peer-based discussions with a Senior Financial Analyst at a major commercial banking institution， a former Solomon distressed assets broker， and my general reading comprehension of business sources such as Motley， WSJ， Financial Reports， and more。 In sum， Buffet's financially conservative， honest， owner-oriented， likeable-admirable-trustworthy-based-measure appears as a beacon in a field rampant with sharks， wolves， charlatans， and deceivers。 In simple prose， Buffet professes financial wisdom equally applicable to the lay as the accredited investor。 Remarkably， there remains much else to be admired。 A caveat: Although self-censorship may be legally required or merely prudent I wonder how Buffet personally feels about the implications of owning stock in corporations dealing products of dubious quality of life indicators。 For example， Berkshire Hathaway is the largest owner of Coca-Cola stock。 However， HFCS appear strongly correlated if not causative of obesity and other coronary-related-illnesses。 In other words， although Buffet criticizes accounting legerdemain， what is his opinion on investor obligations to disclose， inform， or reform the production of unsalutary products？ A defense on libertarian lines， appeals to authority， or discrediting of scientific investigations appear inadequate。 。。。more
Henrik Haapala
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2021-06-13 update:“The bird in the bush” （YouTube: “Warren Buffett speech” for video version） idea from Aesop。Investing = exchanging one bird in your hand for two in the bush。From the book:“At Berkshire， we make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises。 We’re not smart enough to do that， and we know it。 Instead we try to apply Aesop’s 2600-year old equation to opportunities in which we have reasonable confidence as to how many birds are in the bus 2021-06-13 update:“The bird in the bush” （YouTube: “Warren Buffett speech” for video version） idea from Aesop。Investing = exchanging one bird in your hand for two in the bush。From the book:“At Berkshire， we make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises。 We’re not smart enough to do that， and we know it。 Instead we try to apply Aesop’s 2600-year old equation to opportunities in which we have reasonable confidence as to how many birds are in the bush and when they will emerge。” Page 242-243————————————————-• "Inactivity strikes us as intelligent behavior。 Neither we nor most business managers would dream of feverishly trading highly- profitable subsidiaries because a small move in the Federal Re- serve's discount rate was predicted or because some Wall Street pundit had reversed his views on the market。 Why， then， should we behave differently with our minority positions in wonderful businesses？"t• "To suggest that this investor should sell off portions of his most successful investments simply because they have come to dominate his portfolio is akin to sug- gesting that the Bulls trade Michael Jordan because he has become so important to the team。"t• "Let me add a few thoughts about your own investments。 Most investors， both institutional and individual， will find that the best way to own common stocks is through an index fund that charges minimal fees。 Those following this path are sure to beat the net results （after fees and expenses） delivered by the great majority of investment professionals。"t• "If you buy a stock at a sufficiently low price， there will usually be some hiccup in the fortunes of the business that gives you a chance to unload at a decent profit， even though the long-term per- formance of the business may be terrible。 I call this the "cigar butt" approach to investing。 A cigar butt found on the street that has only one puff left in it may not offer much of a smoke， but the "bargain purchase" will make that puff all profit。"t• "Unless you are a liquidator， that kind of approach to buying businesses is foolish。 First， the original "bargain" price probably will not turn out to be such a steal after all。 In a difficult business， no sooner is one problem solved than another surfaces-never is there just one cockroach in the kitchen。 Second， any initial advan- tage you secure will be quickly eroded by the low return that the business earns。"t• "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price。 Charlie understood this early; I was a slow learner。 But now， when buying companies or common stocks， we look for first-class businesses accompanied by first-class managements。"tt• "A further related lesson: Easy does it。 After 25 years of buy- ing and supervising a great variety of businesses， Charlie and I have not learned how to solve difficult business problems。 What we have learned is to avoid them。"t"If your actions are sensible， you are certain to get good results; in most such cases， leverage just moves things along faster。 Charlie and I have never been in a big hurry: We enjoy the process far more than the proceeds-though we have learned to live with those also。"t"In the final chapter of The Intelligent Investor Ben Graham forcefully rejected the dagger thesis: "Confronted with a challenge to distill the secret of sound investment into three words， we ven- ture the motto， Margin of Safety。" Forty-two years after reading that， I still think those are the right three words。 The failure of investors to heed this simple message caused them staggering losses as the 1990s began。"t• "We only want to link up with people whom we like， admire， and trust。"t• "One of the ironies of the stock market is the emphasis on ac- tivity。 Brokers， using terms such as "marketability" and "liquid- ity"， sing the praises of companies with high share turnover （those who cannot fill your pocket will confidently fill your ear）。 But in- vestors should understand that what is good for the croupier is not good for the customer。 A hyperactive stock market is the pick- pocket of enterprise。"t• "Charlie and I feel totally comfortable with this eggs-in-one- basket situation because Berkshire itself owns a wide variety of truly extraordinary businesses。 Indeed， we believe that Berkshire is close to being unique in the quality and diversity of the busi- nesses in which it owns either a controlling interest or a minority interest of significance。"t• "Whenever Charlie and I buy common stocks for Berkshire's insurance companies （leaving aside arbitrage purchases， discussed [in the next essay]） we approach the transaction as if we were buy- ing into a private business。 We look at the economic prospects of the business， the people in charge of running it， and the price we must pay。 We do not have in mind any time or price for sale。 In- deed， we are willing to hold a stock indefinitely so long as we ex- pect the business to increase in intrinsic value at a satisfactory rate。 When investing， we view ourselves as business analysts-not as market analysts， not as macroeconomic analysts， and not even as security analysts。"t• "In fact， the true investor welcomes volatility。 Ben Graham ex- plained why in Chapter 8 of The Intelligent Investor。 There he in- troduced "Mr。 Market，" an obliging fellow who shows up every day to either buy from you or sell to you， whichever you wish。 The more manic-depressive this chap is， the greater the opportunities available to the investor。 That's true because a wildly fluctuating market means that irrationally low prices will periodically be at- tached to solid businesses。 It is impossible to see how the availabil- ity of such prices can be thought of as increasing the hazards for an investor who is totally free to either ignore the market or exploit its folly。"t• "Is it really so difficult to conclude that Coca-Cola and Gillette possess far less business risk over the long term than， say， any com- puter company or retailer？ Worldwide， Coke sells about 44% of all soft drinks， and Gillette has more than a 60% share （in value） of the blade market。 Leaving aside chewing gum， in which Wrigley is dominant， I know of no other significant businesses in which the leading company has long enjoyed such global power。"t• "Moreover， both Coke and Gillette have actually increased their worldwide shares of market in recent years。 The might of their brand names， the attributes of their products， and the strength of their distribution systems give them an enormous com- petitive advantage， setting up a protective moat around their eco- nomic castles。 The average company， in contrast， does battle daily without any such means of protection。 As Peter Lynch says， stocks of companies selling commodity-like products should come with a warning label: "Competition may prove hazardous to human wealth。" t• "On the other hand， if you are a know-something investor， able to understand business economics and to find five to ten sensibly- priced companies that possess important long-term competitive ad- vantages， conventional diversification makes no sense for you。 It is apt simply to hurt your results and increase your risk。 I cannot understand why an investor of that sort elects to put money into a business that is his 20th favorite rather than simply adding that money to his top choices-the businesses he understands best and that present the least risk， along with the greatest profit potential。 In the words of the prophet Mae West: "Too much of a good thing can be wonderful。" t• "Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient。"t• "John Maynard Keynes， whose brilliance as a practicing inves- tor matched his brilliance in thought， wrote a letter to a business associate， F。e。 Scott， on August 15， 1934 that says it all: "As time goes on， 1 get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes。 It is a mistake to think that one limits one's risk by spreading too much between enterprises about which one knows little and has no reason for special confidence 。。。。 One's knowledge and experience are definitely limited and there are seldom more than two or three enterprises at any given time in which I personally feel myself entitled to put full confidence。 "t• "Our equity-investing strategy remains little changed from what it was 。。。 when we said in the 1977 annual report: "We select our marketable equity securities in much the way we would evaluate a business for acquisition in its entirety。 We want the business to be one （a） that we can understand; （b） with favorable long-term pros- pects; （c） operated by honest and competent people; and （d） avail- able at a very attractive price。" We have seen cause to make only one change in this creed: Because of both market conditions and our size， we now substitute "an attractive price" for "a very attrac- tive price。"t• "tIf a business is complex or subject to constant change， we're not smart enough to predict future cash flows。 Incidentally， that short- coming doesn't bother us。 What counts for most people in invest- ing is not how much they know， but rather how realistically they define what they don't know。 An investor needs to do very few things right as long as he or she avoids big mistakes。 Second， and equally important， we insist on a margin of safety in our purchase price。 If we calculate the value of a common stock to be only slightly higher than its price， we're not interested in buy- ing。 We believe this margin-of-safety principle， so strongly empha- sized by Ben Graham， to be the cornerstone of investment success。" 。。。more
InvestingByTheBooks。com
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Warren Buffett is fond of saying that he loves Coca-Cola （the stock） because of the virtue of knowing how its business will look a decade from now （i。e。 the same）。 One can almost certainly say the same about his own writings: A century from now people will still marvel at the insights and resonance from Buffett ́s annual shareholder letters and other publications， trying to apply them in their own investments。 If Security Analysis （Ben Graham） laid the foundations for valuing companies and Phili Warren Buffett is fond of saying that he loves Coca-Cola （the stock） because of the virtue of knowing how its business will look a decade from now （i。e。 the same）。 One can almost certainly say the same about his own writings: A century from now people will still marvel at the insights and resonance from Buffett ́s annual shareholder letters and other publications， trying to apply them in their own investments。 If Security Analysis （Ben Graham） laid the foundations for valuing companies and Philip Fisher ́s Common Stocks。。。detailed how true business analysis should be done， then Essays of。。。 will be referred to as the advisory blueprint of combining these two to create an outstanding- and lasting investment result， all the while having impeccable ethical standards。 Given the fact that there are 53 million hits on “Warren Buffett blogs”， there simply is no substitute to reading the actual words of the best investor of our time。Due to Berkshire ́s massive success in all aspects of the word， Buffett has transformed into a cartoon-like figure， with even professional investors knowing him more by punchy one-liners such as “our favourite holding period is forever”。 As headline-ish as this is， it is akin to judging the merits of Usain Bolt from a Puma-commercial。 To me， apart from the Berkshire-numbers themselves， what has always been the standout attribute of Buffett and his letters are the ability to synthesise immensely complex matters into common-sense opinions。 Has there been better real-life practitioners than Buffett and Munger of Einstein ́s quote “everything should be made as simple as possible， but not simpler”？ The shareholder letters are filled with discussions around everything from board practices， arbitrage， “value” investing， junk bonds， accounting， tax policy， stock-options and countless other topics。Essays of。。。 consists of chosen parts of Buffett ́s letters to Berkshire shareholders throughout the years， organized according to coherent themes。 By compiling them in this way， Cunningham clearly did all us Buffett-lemmings a massive favour。 But not only that。 I believe that this book has given – and is destined to increasingly do so in the future – Buffett’s writings the attention they deserve among a wider audience。 Not merely as a convenient go-to source for journalists to get his views on the flavour-of-the-day topic， but more importantly as mandatory reading for business school students and corporate decision-makers。 As Cunningham states: “Many of Buffett ́s lessons directly contradict what has been taught in business and law schools during the past thirty years， and what has been practiced on Wall Street and throughout corporate America during that time”。 This collection of essays can truly re-educate a generation of students and continue the education of others。 This is more important than it sounds， because if the gospel of modern finance theory and using complexity for its own sake had done enough harm upon this book ́s publishing date in 1997， it has doubled down on its effort as of today。In my mind， some of the most interesting letters are the ones written in the late 70s and 1980s。 It was during this time Buffett transformed from cigar-butt and “work-out” investing to the methods most people define him by today; predictable corporations with a competitive moat bought at a fair price。 One of the first investments made along this line of thinking， at the behest of partner Charlie Munger， was the 1972 acquisition of See ́s Candy from the See-family。 The letter（s） that go through this thought-process are superb in describing the merits of investing in high-return business。 As a side-note， despite paying only 6x profits， the relatively high P/B multiples actually made Buffett reject the deal before finally completing it。Some books just provide the reader with that “intangible” value of being worth more than the sum of its words。 It leaves you with an extra layer of conviction of what ́s right and wrong， what ́s permanent knowledge and what ́s more fleeting。 Essays of。。。 has that invaluable quality。 。。。more
Akshat Solanki
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AgainThe Essays of Warren Buffett， as the name suggests is the book about the investing style of Warren Buffett and his approach when it comes to investing in the businesses or buying them out。The author has chosen these broad topics on which Warren Buffett have talked about to the Berkshire Hathaway shareholders through the company's Annual Report。1。 Corporate Governance2。 Merger & Acquisitions3。 Accounting Principles4。 Business ownershipYou will get to read what does the great investor thinks AgainThe Essays of Warren Buffett， as the name suggests is the book about the investing style of Warren Buffett and his approach when it comes to investing in the businesses or buying them out。The author has chosen these broad topics on which Warren Buffett have talked about to the Berkshire Hathaway shareholders through the company's Annual Report。1。 Corporate Governance2。 Merger & Acquisitions3。 Accounting Principles4。 Business ownershipYou will get to read what does the great investor thinks about these 4 main sections and other subsections when investing in the companies， businesses。 This book is the collection of Warren Buffett's annual letter， so if you have read his letters and a book called The Warren Buffett Way: Investment Strategies of the World's Greatest Investorthen I think reading this book will surely be the waste of time。But in case， if you think you've forgotten what he's written， then you may read this book。Akshat Solanki 。。。more
Swapnildubey
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