The essays of Warren Buffett: Lessons for corporate America [Unknown Binding]

Warren Buffett (Author)

Book Description

Publication Date: 1998

The definitive source for Warren Buffett's ideas, this is a thematically arranged collection his famous chairman's letters to Berkshire Hathaway shareholders, prepared by Professor Lawrence Cunningham.

--This text refers to the Paperback edition.

Editorial Reviews

Amazon.com Review

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 --This text refers to the Paperback edition.

Review

"A classic of value investing." -- The Financial Times, June 23, 2000

"Extraordinary--full of wisdom, humor and common sense. By far the best window into the way Buffett's mind works." -- Money, July 1998

"Recommended as excellent reading. Two thumbs up." -- CNN-fn, June & December 1998

Quoting Warren Buffett: "Larry Cunningham has done a great job at collating our philosophy. If I were to choose one book to read, this would be the one." -- Outstanding Investor Digest, January-February 1999 --This text refers to the Paperback edition.

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Product Details

• Unknown Binding: 219 pages
• Publisher: s.n.] (1998)
• Language: English
• ASIN: B0006R7C62
• Average Customer Review: 4.7 out of 5 stars  See all reviews (96 customer reviews)
• Amazon Best Sellers Rank: #5,657,452 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

279 of 292 people found the following review helpful:

5.0 out of 5 stars What they do teach you at Harvard Business School, June 10, 2003

By 

Marc Cenedella "www.cenedella.com/stone" (East Village, New York, NY United States) - See all my reviews
(REAL NAME)   

This review is from: The Essays of Warren Buffett : Lessons for Corporate America (Paperback)

In the first place, Lawrence Cunningham, whose school it turns out is just a couple blocks from me here in Manhattan, has done a very fine public service in collecting these essays. If you've ever tried to wade through Buffet's annual letters yourself, you know that there are long bits of detailed financial discussions interspersed with the gems of wisdom, aphorisms, and humor that the amateur Buffet-ette is more apt to be seeking. So his collection and coalition, which is well-chosen, well-ordered, and well-edited is a treat for any Buffet fan looking for an accessible volume of the man's work.

Buffet has the strangest of powers in that he comes across as a homespun billionaire. Now that's different from just being homespun, the way Sam Walton was, or just being a billionaire, like Bill Gates. Buffet flaunts his wealth and his professional love of money, all the while expressing essential, eternal truths in simple, earthy phrases. When I saw Buffet speak at business school he tapped on the microphone to test it and said "testing, testing, one-million, two-million, three-million." It is that natural genius for combining wealth, truth and comedy that is most vividly on display in "The Essays of Warren Buffet.".

Of course, these timeless, simple truths are all known - the way we know that "eat less, exercise more" is how to lose weight. And yet, and yet, it takes Buffet to remind us to "think like an owner"; invest only in management that you "like, trust, and admire"; and buy pieces of business (stocks) when it costs less than the intrinsic value.

There are the excellent statements of managerial accountability, business valuation, and capital structure. Helpful warnings on accounting shenanigans, trading costs, and paying heed to Mr. Market. For clarity, brevity, wit, truth, and learning, there is no business writer in the 20th century that compares with Warren Buffet.

Buffet's sayings are irreplaceable (and I am not cherry picking here, but merely highlighting a half-dozen of the hundreds of bon mots in this book):

"On the other hand, working with people who cause your stomach to churn seems much like marrying for money - probably a bad idea under any circumstances, but absolute madness if you are already rich."

"The speed at which a business success is recognized, furthermore, is not that important as long as the company's intrinsic value is increasing at a satisfactory rate. In fact, delayed recognition can be an advantage: It may give us the chance to buy more of a good thing at a bargain price."

"Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds... any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops"

In regard to acquisitions, which usually fail to earn the cost of capital: "The managers at fault periodically report on the lesson they have learned from the latest disappointment. They then usually seek out future lessons."

"One of the ironies of the stock market is the emphasis on activity. Brokers, using terms such as `marketability' and `liquidity," sing the praises of companies with high share turnover... but investors 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."

On acquiring bad companies for cheap prices: "In my early days as a manager I, too, dated a few toads. They were cheap dates - I've never been much of a sport - but my results matched those of acquirers who courted higher-price toads. I kissed and they croaked."

Buffet is approaching literature here - the nuance involved, and the delicious counter-pointing of toads, dates, sport are pitch-perfect. The payoff - "I kissed and they croaked" is as fine a line of found poetry as exists.

Buffet, having studied at the feet of the master of investment literature for the first half of the 20th century, has ascended to become the master of investment literature, unqualified. This is a book that will please Buffet-maniacs, investors, finance newbies, and anybody with an interest in the articulated evolution of managerial capitalism that has separated the finance and capital allocation specialties from the operational and day-to-day specializations.

In closing, it's appropriate to quote America's great investing wag quoting America's greatest political wag - the subject is, as always with Buffet, simple maths and simple truths:

"Managers thinking about accounting issues should never forget one of Abraham Lincoln's favorite riddles: `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'."

Enjoy this book.

110 of 117 people found the following review helpful:

5.0 out of 5 stars Time extremely well invested., August 3, 2000

By 

taking a rest - See all my reviews
(HALL OF FAME REVIEWER)   

This review is from: The Essays of Warren Buffett: Lessons for Corporate America (Paperback)

I cannot imagine that Mr. Warren Buffet is not on any investor's top 10 list of the greatest investors since there were markets in this Country. I would also suggest that a dispassionate appraisal of his performance argues quite eloquently that he is the best to have ever amassed his fortune, and that of his shareholders on Wall Street.

Thanks to the efforts of Mr. Lawrence A. Cunningham readers have access to essays that previously were available primarily to shareholders, and which are organized in this book thematically for the first time. Annual reports are generally easy to come by, however as I write, 1 Share Of Berkshire Hathaway "A" requires $59,900.00, and the "Baby Berkshires" $1,966.00 per share. Many are quick to respond the price is so high as Mr. Buffet has not split the stock, ever. But what is more important is why he has never done this. This book explains his theory on this matter, and dozens of others.

Mr. Buffet has his critics, they range from the idiotic, "he's lucky", "his success allows him to make attractive deals", and to those who feel he missed the money that was made in tech stocks. As for the luck theory, who else has earned 23.8% compounded annually for over 25 years? Winning the lottery is probably more likely an event. As to the attractive deals his wealth is said to facilitate, I guess the answer is, is the questioner serious? He made what he has, his reputation allowed him to have the Federal Government allow Solomon Brothers to continue participating in the bond market based on one thing, his word! This is a man who has rescinded very successful trades because news arrived within days of his buying that could have given the appearance of his having had information others were not privy to.

This book has more useful information and ideas that have been proven over decades than any 10 hot Business Books of the moment. Mr. Buffet has had off years, but he has never gone bust.

One of my favorite stories is when he was hanging out with friends as a kid, his pals were collecting bottles for the deposit. He was collecting bottle caps, sorting them, and determining who was drinking what brand! He clearly was put amongst us for a reason.

On a time invested basis there is no better or more rewarding reading than these essays. No one can match what he has accomplished, why would someone not wish to hear what he has to say on dozens of topics?

58 of 61 people found the following review helpful:

3.0 out of 5 stars Just buy the Compendium of Letters to Shareholders, April 22, 1999

By A Customer

This review is from: The Essays of Warren Buffett: Lessons for Corporate America (Paperback)

The book is well-organized, but it is just a reorganized version of Buffett's original words. I assume that readers purchased the book so that everything would be "laid out" for them. But as Charlie Munger, Berkshire's vice-chairman, said about common stock investments at a shareholders' meeting, "If it were that easy, everyone would be rich." One would be better off obtaining copies of the actual letters to shareholders. They are available on Berkshire Hathaway's website, and a compendium of letters to shareholders from 1977 to 1995 is available for purchase directly from the company for a reasonable price. I would recommend starting with the 1977 letter and proceeding in a chronological fashion. This would add context - a backdrop - for Buffett's investment philosophy. For instance, one would notice his evolution, as his emphasis shifted from mostly statistical undervaluation to favorable qualitative factors. Although he still seeks a "margin of safety" in his investment purchases, he is now more in tune with Philip Fisher than with Benjamin Graham. (His evolution was helped by Charlie Munger, who recognized, earlier in his investment career, the importance of subjective factors which are not readily quantifiable.) The book would be useful as a quick reference guide, but for the investment fanatic - and any truly successful investor is - the Berkshire Hathaway Letters to Shareholders are priceless.