The Essays of Warren Buffett : Lessons for Corporate America 
asked by shagdag on November 10, 2006 1:17 PM
Buffett, the Bard of Omaha, is a genuine American folk hero, if folk heroes are allowed to build fortunes worth upward of $15 billion. He's great at homespun metaphor, but behind those catchy phrases is a reservoir of financial acumen that's generally considered the best of his generation. For example, in an essay on CEO stock options, he writes, "Negotiating with one's self seldom produces a barroom brawl." This is his way of saying that an executive who can give himself compensation totally disproportionate to his performance surely will. There are uncountable gems of financial wisdom to be harvested from these essays, taken from the annual reports he writes for Berkshire Hathaway, his holding company. Just to pick one more, here's a now-famous line about those he competes with when making stock-market investments: "What could be more advantageous in an intellectual contest--whether it be chess, bridge, or stock selection--than to have opponents who have been taught that thinking is a waste of energy?"
While Buffett has a policy of seldom commenting on stocks he owns--he feels public pronouncements will only lead to the public's expectation of more public pronouncements, and he likes to keep his cards close to his vest--he loves to discuss the principles behind his investments. These come primarily from Ben Graham, under whom Buffett studied at Columbia University and for whom he worked in the 1950s. First among them is the idea that price is what you pay and value is what you get--and if you're a smart investor, the first will always be less than the second. In that sense, the value of the lessons learned from Buffett's Essays could be far greater than the book's price. --Lou Schuler
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When I recieved "The Essay's of Warren Buffett...", I have to admit I was disapointed. I could gather the essays from Mr. Buffet's Annual reports myself. However, the book's organization is where the value lays. The author has spliced together associated topics from various essays in a manner that makes it appear that they were part of one to begin with. What results is an invaluable source on Mr. Buffett's thinking on a broad range of subjects and how some of his positions have evolved over time. I was truly happy that I did not disregard what I initially percieved to be a poor purchase on my part. Enjoy!
reviewed by dataworld on November 27, 2006 7:43 PM
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Short and sweet, this book is a collection of Warren Buffetts essays! He one of the riches and most financially savy men in the world, he might not be 100% right 100% of the time, but he is damn close!
Amazing book, you will be glad you purchased it!
Amazing book, you will be glad you purchased it!
reviewed by librarian on November 28, 2006 10:33 PM
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These essays are collected from Berkshire's annual letter to shareholders, which are available for free on Berkshire Hathaway's website. The essays Lawrence Cunningham selected provide a good synopsis of Warren's investment philosophies and cut through to the point of some very important concepts. Both Warren Buffett and Charlie Munger are the clearest-minded, sharpest, to-the-point thinkers when it comes to investments and their openness in sharing their true beliefs is an unbelievable blessing for those wise enough to pay attention and study. I doubt there is any other billionaire who would share his innermost thoughts, beliefs and secrets to success in the fashion that Buffett does.
OK enough praise, I could go on and on about his successes but here are a few tidbits from the book:
"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 Reserve's discount rate or because some Wall Street pundit had reversed his views on the market."
"Obviously many companies in high-tech businesses or embryonic industries will grow much faster in percentage terms than will `The Inevitables- Coke, Gillette and his latest perchase BUD'. But I would rather certain of a good result than hopeful of a great one."
"In our view, though, investment students need only two well-tought courses-How to Value a Business, and How to Think about Market Prices. Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business who's earnings are virtually certain to be materially higher five, ten and twenty years from now."
"In the final chapter of The Intelligent Investor, Ben Graham points our: `Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.' Forty-two years after reading that, I still think those are the right three words."
"Beware of past-performance `proofs' in finance: If history books were the key to riches, the Forbes 400 would consist of librarians."
"Market commentators and investment managers who glibly refer to `growth' and `value' styles as contrasting approaches to investment are displaying their ignorance, not their sophistication."
Berkshire's purchase criteria:
1) Large purchases (at least $50 million of before tax earnings)
2) Demonstrated consistent earnings power (future projections are of little interest to us, nor are turnaround situations)
3) Businesses earning good return on equity while employing little or no debt
4) Management in place - We cant supply it
5) Simple business (if there's l;ots of technology, we won't understand it)
6) An offering price
Some interesting stats on See's Chocolates which was bought in 1972 by Blue Chip Stamps- a subsidiary of Berkshire:
Bought early in 1972 for $25 million and was earning about $2 million after tax. (which was 25% return on net tangible assets of $8 million)
In 1983 See's earned $13 million after taxes ($27 million pre-tax)
In 1995 it earned $50 million pre-tax
By Kevin Kingston author of A 20,000% Gain in Real Estate: A True Story About the Ups and Downs From Wall Street to Real Estate Leading up to Phenomenal Returns
My Blog: The Real Estate Investors Blog
reviewed by bookworks on November 29, 2006 5:28 AM
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This excellent book was hard to put down. Mr. Buffett is as innately talented a writer as he is a businessman. The book funny, entertaining and highly informative, is sure to add significantly to the knowledge of any aspiring investor. Buffett takes topics like corporate accounting malfeasance and makes you laugh at them while at the same time providing profound insight into the inner workings of the corporate enviornment. This title is definatly one you will want to own.
reviewed by ctj on November 29, 2006 9:06 AM
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Good book! Definitely one of the bests written about Warren Buffett.
Ocean Blue
Ocean Blue
reviewed by glassysurf on November 29, 2006 7:23 PM