Of Permanent Value: The Story of Warren Buffett (Updated and Expanded Edition) [Paperback]

Andrew Kilpatrick (Author)

Book Description

Publication Date: February 22, 2001

The author also includes a complete chapter detailing his remarkable investing record - quarter by quarter - that reveals the incredible investment performance of this compelling and enigmatic figure.

Editorial Reviews

Review

"The definitive story of {Buffett's} career" --London Daily Telegraph

"A wonderful compilation of stories and anecdotes about Buffett's experience, his investments, his hobbies, and his outlook on life." --John Tier, author of The Winning Investment Habits of Warren Buffett and George Soros

"A bit skimpy." --Warren Buffett --This text refers to the Hardcover edition.

From the Inside Flap

At age six Warren Buffett paid a quarter for a six pack of Cokes and sold each Coke for a nickel-a return of 20%. From then on he compounded his returns at better than 20%. That's why he's a multi-billionaire-indeed the second richest person in the world..

Today Buffett's investment vehicle, Berkshire Hathaway, is a major shareholder in some of the greatest companies on earth: Coca-Cola, Gillette, Disney, American Express, a brand name extravaganza. GEICO, Berkshire's auto insurance unit, and Berkshire's other insurance entities, make up one of Buffett's secret weapons. They provide about $7 billion of "float," or other peoples money. Berkshire receives the money in the form of premiums and invests it, multiplying it profitably until time to pay off insurance claims. Berkshire, often thought of as a batch of stocks worth about $40 billion, is far more. The stock portfolio Is one of its three legs. The second leg is the enormous insurance business. A third leg is a collection of wholly owned businesses. With the purchase of the rest of GEICO in early 1996, the buyout of FlightSafety International in late 1996 and the smaller purchases of Star Furniture in 1997 and International Dairy Queen in 1998, Berkshire is now a constellation of operating businesses. The enormous stock portfolio, the insurance businesses and the operating businesses all do one thing-throw off a ton of cash for new investments. None of this counts the 129.7 million ounces of silver, some oil and fixed-income portfolio worth north of $10 billion. And none of this includes Berkshire's newest amazing deal-the $22 billion purchase of General Re Corp. Although it is Buffett's genius and personality which holds Berkshire together, he has had help from an extraordinary group of people. First and foremost is Charles Munger who has offered advice for almost 40 years and has pulled Buffett away from investing in lesser quality stocks. Munger has helped Buffett see the advantages of brand name companies with consumer franchises, pricing power and durability. Buffett and Munger-in Buffett's words-became "mental partners" back in 1959. Munger jokes that he deserves credit for hooking up with Buffett in the early days when Buffett had no outward appearances of success. "He had a crew cut. He was working out of a sun porch at his house and his dietary [leanings] were toward Pepsi, salted nuts and no vegetables." Munger, Lou Simpson and Ajit Jain within Berkshire have aided Buffett as have a number of figures outside Berkshire, including Tom Murphy, Katharine Graham and Bill Ruane. --This text refers to an out of print or unavailable edition of this title.

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Product Details

• Paperback: 1178 pages
• Publisher: McGraw-Hill Companies; 2nd edition (February 22, 2001)
• Language: English
• ISBN-10: 0071370803
• ISBN-13: 978-0071370806
• Product Dimensions: 8.9 x 5.9 x 1.6 inches
• Shipping Weight: 3.1 pounds
• Average Customer Review: 4.3 out of 5 stars  See all reviews (44 customer reviews)
• Amazon Best Sellers Rank: #2,254,412 in Books (See Top 100 in Books)
  • #53 in Books > Biographies & Memoirs > People, A-Z > ( B ) > Buffett, Warren

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Customer Reviews

Most Helpful Customer Reviews

24 of 27 people found the following review helpful:

3.0 out of 5 stars For "Berk-Heads" Only, May 23, 2003

By 

thewahlmighty (Hanoi) - See all my reviews

This review is from: Of Permanent Value: The Story of Warren Buffett (Updated and Expanded Edition) (Paperback)

This is a relatively well-written book, telling the story of Warren Buffett in great detail. Let me emphasize this last part by repeating it: it tells the story of Warren Buffett _in great detail_.

Author Andrew Kilpatrick has tackled his subject with the dedication of a stalker. Throughout _Of Permanent Value_ readers will be told, not just how WEB has accumalated a mind-boggling fortune, but also how well he tips (or doesn't), who his favorite philosopher is and what type of car he drives. You'll learn of the different groups of Buffett fans, the relatives of Buffett, the foundation that will spread around his wealth after he's no longer tap-dancing to work. And you'll read accounts of (random) people who saw Buffett in China, who taught or went out with him when he was younger, and so on and so on ad infinitum.

As such, the book is primarily for those who want to know more about who Warren Buffett the person is, than about how one can be more like him financially. To those, then, who want to know how to invest like Buffett I do not recommend you read this book--at least not until after you've read the other, better books on this subject. These are _The Warren Buffett Way_ (my favorite), _The Making of an American Capitalist_, and _How to Pick Stocks Like Warren Buffett_.

If you, however, _do_ want to know much more about Buffett than the average person, this book can not be recommended highly enough. Everything has been written down in the pages of this book--the only thing that wasn't discussed was whether Buffett wears boxers or briefs. (I'm sure Kilpatrick's saving this one for the next, revised edition however.)

10 of 10 people found the following review helpful:

5.0 out of 5 stars The best book about Warren Buffett. A must read for all Buffett fans., December 12, 2006

By 

Sidarta Tanu (Richmond, VA USA) - See all my reviews
(VINE VOICE)    (TOP 500 REVIEWER)    (REAL NAME)   

This review is from: Of Permanent Value: The Story of Warren Buffett/2007 International Edition/in 2 volumes (Hardcover)

First, I want to mention two things that you should know about this book. One is that this book is suitable for Warren Buffett true fans (if you aren't yet, you probably will become one after you read this book). Secondly, since this book contains almost everything that you might want to know about Warren Buffett, the book is quite thick (though this year it is divided into 2 volumes which is very helpful and much more convenient to hold/read). The indexing might be confusing (Andy mentioned that he tried to make it in chronological order, and I belive at the same time he wanted to put some fresh content in the first couple chapters). I have read this book more than once (including the previous versions), so I'm quite familiar with the content and structure, but even as you started completing a couple chapter, you would be able to start understanding the big picture (from Warren's childhood till his current Berkshire days.)

One very positive points about this book is: eventhough this book is very abundant in information, it is not boring to read. One of the reason is that the chapters are mostly short (and getting directly to the point). If you don't feel like reading the whole book , you can always pick the chapters that interest you. Kudos to Andy Kilpatrick for putting this book together (I also appreciate his sense of humor). Once you know the limitation (thick, somewhat random indexing), this book is easily considered the best book about Warren Buffett in my opinion. Not only for today, but ever.. I know that is a bold statement...

Another thing I like about Of Permanent Value: Pictures.. pictures.. pictures.. Lots of pictures.. A picture worth a thousand words..

Now about the content of the book. You will learn a lot about Warren Buffett and his life, and not only investing topic (investing decisions that he made throughout his career) but his life principles, family, and business in general as well. You will learn about his first job delivering papers when he was 13 (he filed income tax and deducted the bike as business cost), and how he build his first business (pinball machine business), created Buffett partnership, break it up (liquidate), acquire berkshire mills, creating Berkshire Hathaway as investment vehicle, and many other great investment decision/story that he made (Geico, See's Candies, Dairy Queen, General Re, Coca Cola, Salomon, Washington Post, Gillette etc)

Buffett concrete rules for investing are:
1. Never lose money
2. Never forget rule #1

I know it's easier said (what he say above about to never lose money) than done based on my 10 years of invesitng experience , but then again I'm no Warren Buffett.

In my opinion, here are the 5 strategy/skills that Warren Buffett uses (Mr. Buffett, please correct me if I'm wrong):
1. Intrinsic Value
2. Margin of Safety
3. Temperament (discipline and understanding Mr.Market)
4. Circle of Competence (knowing what your circle of competence)
5. Common Sense (which I think is the most important factor and encapsulate everything about Warren Buffett.)

You will learn that Warren is very good with numbers (calculating in his head) and memorizing so many facts and numbers. You will also learn that Warren is a man with a very good sense of humor.

There are so many things/chapters that I like on this book. Let me try to mention three of my favorite sections.

One is when Warren need to make a decision who would run Salomon ($150B institution with 8000 employees) within 2 days during their first crisis. There are 12 top-level managers that he interviewed. "This was the most important hire of my life", said Warren to the Columbia business students. The chapter explain his thought process of this candidate selection in detail. Warren mentioned that the good news (for the students and the candidate) is that he didn't ask what their grades were (laughter). Warren also said, "Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence and energy. and if they don't have the first, the other two will kill you. if you think about it, it's true, if you hire somebody without integrity, you want them to be dumb and lazy" (laughter). And he conclude the topic with this statement which I think is very powerful: "Pick the kind of person to work for you that you want to marry your son or daughter. You won't go wrong". By the way, he picked Deryck Maughan by the way for his integrity.

Another chapter that I really like is how Warren put the audience (of more than 2000 people) through Business School in an electrifying two minutes (The chapter about "Generics"). See how Warren answer the question of "Will developments in the generic brand area hurt coca-cola?" which is a very important questions. I'll try not to spill too much and take the joy of reading this chapter yourself but he basically explains in a nutshell (with all the details and numbers) how business and competition works (and using several other example like Gilette, Marlboro, Sam Cola etc) and how he convinced the audience (and me as a reader) that coca cola is considered immune to generics. He explains how one can save $500 for smoking generic brand (vs Marlboro) which is a lot of money. While a man will probably will only save $11 per year by not using Gilette Sensor and probably leave band-aids on his face and an uncomfotable experience for opting for generics/lower quality blades. And for coca cola, the net profit margin is only 1 cents per serving (can) while a lot of the ingredients cost (such as the aluminium close to 6 cents a can, sugar 1.3 ounce per can or 1.75 cents etc) the same regardless for coke or other cola company.

The third chapter that I like is when Warren is being questioned by CEOs about what is his best advice for CEOs/leaders.. expecting to get some standard answers like honesty and loyalty.. Warren actually didn't even touch those areas (which I'm sure Warren do think those are also important).. but what Warren actually said is, "Set your expectation low, and you will rarely get dissapointed".

I'll stop here before it's getting too long. In summary, If you are a Warren Buffett fans, then this book is for you. If you are uncertain, you can get other books first (potentially less thick book), like "Warren Buffet Way" or maybe "Buffettology", and if you like them (Warren) or want to know more about Warren then get this book. I personally don't like it at the beginning but as time goes by (and after I re-read the book/chapters), I changed my mind, this book is a masterpiece.

As a Berkshire shareholder, I want to encourage all berkshire shareholders (and potential/future shareholders) to read this book to know more about the person in charge of your berkshire investment. I also want to encourage all shareholders to go to the annual shareholder meeting while Mr. Buffett is still in charge.

Last but not least, if I have to sum this book up in a word or two, I would use the word "WISDOM" to describe this book, though I have a strong feeling that Warren will disagree with me and think that the more suitable phrase is "COMMON SENSE"

Happy Investing!

Sidarta Tanu

11 of 12 people found the following review helpful:

5.0 out of 5 stars The definitive guide to all things Buffett and Berkshire Hathaway, January 15, 2007

By 

Richard Casterline "WBuffettJr" (Austin, TX United States) - See all my reviews
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This review is from: Of Permanent Value: The Story of Warren Buffett/2007 International Edition/in 2 volumes (Hardcover)

I still remember the joy I felt discovering the 1996 edition of this book. I am an avid Warren Buffett fan, and was hungry to find information on Warren and his company, Berkshire Hathaway. I had trouble finding a good source of information on Buffett until I stumbled on an old used copy of Of Permanent Value, the 1996 edition. It was years old and thus wasn't up to date, but was everything I was looking for. I have owned the last four latest editions since that discovery, so that I am always kept up to date.

OPV gets a makeover for 2007...switching to a two volume format to encompass the huge amount of updated information on BRK. I must say, this new format was a long time coming, as the bindings are much better than on the 2006 version, which was huge!

This latest version has updates on everything from Hurricane Katrina to the new Iscar purchase, to Warren hanging out with LeBron James. While containing all of the latest updates, this book also retains all of the information it always had going back to the earliest days of BRK -- complete with copies of the actual paperwork drawing up the original Buffett Partnership!

There really is no comparison to any other book out there, as no other book comes close to offering the breadth of information on Warren Buffett. This book even has his first tax return, which he filed at age seven. While this is a very thick set of books, it doesn't have to be read from cover to cover. The book is split into 355 separate sections, with a detailed table of contents making it easy to skip to the section you want to read. It doesn't flow from cover to cover...so at this point I think of it more as a reference, like an encyclopedia on Warren and Berkshire, where you skip to any subject in which you are interested.

This book also includes the extracurricular activities surrounding Buffett, including the Yellow BRKers fan club and the shareholder's meetings. I like to sit down and re-read a good chunk of the latest issue before the shareholder's meetings to get fired up. I actually learn new things every time I read a section, because there is so much there. It's also fun to take to the shareholder's meetings, because the author is usually in the exhibit hall and will autograph your copy.