The Essays of Warren Buffett - 8th ed

The Essays of Warren Buffett is a collection of writings from Buffett to shareholders of Berkshire Hathaway over the last decades. There is a new edition out which might contain updated material, but this edition covers writings from the 80s till the first internet bubble. Lawrence Cunningham chooses a variety of topics and associated writings to give the reader an impression of how Warren Buffett has seen the market, investing and the variety of agency issues associated with making decisions in financial markets. The book is filled with intuitive insight and will always be relevant and all the more useful in periods when pricing and economics become disassociated. The Essays of Warren Buffett touches on many topics. The topics included are governance investing, alternatives, common stock, acquisitions, valuation, accounting, tax and some history. Buffett starts by discussing alignment of interest and describes how him and Charlie Mungers financial fate are squarely determined by the absolute performance of Berkshire stock and how they are first and foremost shareholders. They then discuss governance structures that they approve of and characterize a bunch of structures which are weak. Though the writing is out of date with the monstrosity of packages awarded to executives today for no measurable improvement to the businesses they run, the spirit of their concerns remains more valid than ever. Boards of directors should be forced to read this to be reminded of their role. The major topic is of course investing. The authors describe a host of opportunities that they consider from long term investing identification, how to deal with the vagaries of the market and how to think about building portfolios. At the end of the day the messages are clear, one should be disciplined, use the markets emotional waves for better entry prices. Buying great businesses at fair prices is better than buying fair businesses at great prices and so on. There are many gems in the writing. There is a collection of writings on alternatives to common stock investing, including junk bonds and pref shares and convertibles. This is somewhat dated as finance has gone off the deep end embracing financial engineering without economic purpose. Nonetheless a framework for thinking about alterative payoff profiles remains insightful, though less relevant than the principles of investment chapter. The authors then discuss common stocks and the associated risks and rewards. It would be have been fascinating to have old valuation based investors transported into 2020 where stock splits elevated stocks by massive amounts on the biggest of companies (the consequence of how efficient markets are no doubt... I would love to hear Fama rationalize that phenomenon as efficient). The chapter on acquisitions remains relevant and discuss agency problems that remain issues today. They also discuss buybacks reminding the reader what a rational buyback policy should be based on rather than some of the behaviors undertaken today by management incentivized to raise the stock price above their management option strikes. The chapters on valuation and accounting are fantastic. They remind the reader what common sense but simultaneously deep perspectives are on thinking about valuation and thinking about how to think about accounting and real earnings power of businesses. These remain relevant for every market and give a framework for considering intangibles, the foundation of many modern tech giants. At the time of this review, markets have gone into full bubble mode in many pockets. One only has to read a book like this to be reminded that, this isn't the first time and to participate rather than tread with caution will lead to regret. The writings give a timeless grounding to the thoughtful investor and this will remain full of gems for decades to come.

A must read for any investor. Extraordinary amounts of wisdom & common sense. Cunningham lays out everything related Berkshire's philosophy. It takes all of Buffett's partnership & shareholder letters and organizes them into specific subject chapters. This book has been recommended by the best investors, such as Bill Ackman. I will be re-reading this novelty if time allows.

If you are not familiar with Warren Buffett he is the greatest investor of all time. Mentored by Benjamin Graham (The father of value investing" he went on to produce over an annual 20% return in his stock portfolio for 40 years. As Chairman of Berkshire Hathaway he also brought a failing textile business that was trading at $4 a share in 1965 to the highest priced stock ever at over $100,000 a share in 2007. If you are are familiar with Mr. Buffett then let me tell you I am also a huge fan. This book is the one he chose out of a stack of books during a special that featured him on CNBC during the holidays "The billionaire next door".He said this one out of the many written about him capture his thoughts and investment style. Mr. Buffet's comments about this book were "First class. A great job at collating our philosophy". Can you get a better review than that? I was not disappointed, this is the book to by if you want to study and understand Warren Buffett. The author has done an excellent job arranging the essays to the shareholders in a format that will enable us all to learn the key principles in investing and managing followed by Buffett.I always wished that Mr. Buffett would have written a book, this is the closest we may ever have. Buy it and enjoy, it is packed with profound yet simple wisdom. Here are a few examples: Virtually all his $40 billion net worth is in Berkshire stock.(99% of it) So much for diversification, he believes in putting all your eggs in one basket, then watching that basket. Margin of safety is critical in investing, only buy excellent businesses at fair prices. Only invest in businesses you understand. Your circle of competence. He does not believe "value investing" is the right term for him. He prefers "focused" or "intelligent" investing. He believes in buying excellent businesses, and then holding them, forever if possible. When investing he believes in buying true value not hopes and dreams. Get out a high lighter and prepare to learn. It is packed with great quotes and lessons.

Lawrence A. Cunningham opens this book with an appropriate excerpt from the essays of Michel de Montaigne: "The speech I love is simple, natural speech, the same on paper as in mouth; a speech succulent and sinewy, brief and compressed, not so much dainty and well-combed as vehement and brusque." There is no shortage of books on Warren Buffet. It is an interesting state of affairs: numerous writers, pundits, and other Warren Buffet "experts" opining on the life and investing decisions of perhaps the greatest investing and capitalist "expert" of all time. Others opining on the life of a genius is often necessary, when it comes to understanding the broader impact that genius has had on society. A masterful investor, scientist, engineer, or whatever is not also necessarily always an effective writer and communicator. Mr. Buffet, however, is a rare breed. Not only has Mr. Buffet, across his lifetime, compiled the most impressive track record capitalism has ever produced- one of growth, achievement, societal awareness and improvement, but he can also write. He writes in a language that is, in the words of Montaigne, "simple...succulent and sinewy, brief and compressed...brusque." Lawrence A. Cunningham through this book expresses an important truth- when a man such as Mr. Buffet writes with the clarity and power that he does, not much benefit is given to the reader by adding words on top of what is already clear and powerful prose. If one is trying to make sense of Mr. Buffet and his philosophies, the best place to start is with Mr. Buffet's own "sinewy" words, which are presented, unadorned except with a short preface, in this book. "Essays" is a bit of a misnomer for the content of this book. In fact, this book is actually a compilation of excerpts from the Annual Letters Mr. Buffet has written to the shareholders of his company, Berkshire Hathaway, over the last thirty plus years. Worth noting, these very letters are available, in their entirety, on the World Wide Web for free. Something, however, is definitely gained through reading Mr. Buffet's words as Mr. Cunningham has arranged them. Mr. Cunningham has arranged this book by subject, rather than time- and the effect is pleasing and effective. The way that Mr. Cunningham chose to arrange Mr. Buffet's letters is into the following categories: Corporate Governance, Corporate Finance and Investing, Alternatives to Common Stock, Common Stock, Mergers and Acquisitions, Accounting and Valuation, and Accounting Policy and Tax Matters. The effect of Cunningham's carefully-chosen delineations is a book that has more the feel of an educational guide, than a story of Mr. Buffet's investing career and his company, Berkshire Hathaway. What emerges out of this educational guide is the philosophy and teachings of a gifted Professor and practitioner. No matter whether Mr. Buffet is waxing poetic on business or outlining his scruples over how corporations account for equity stock options, out of his writing emerges a consistent and eloquent philosophy on the "right" and effective approach to business, investing, capitalism, and life. The "Buffet Way", perhaps impossible to summarize fully in a few short sentences, is stoic and original. The practitioner of this philosophy is one who stands apart from society, ignores any "institutional imperative" that may impede rational decision-making. The "Buffet Way" is a mode of analysis that knows the bounds of its own limitations, and is free of emotion. The Buffet Way demands that every decision require a "margin of safety" or room for error. Most importantly, Mr. Buffet's view of investing, and particularly of investing in the stock market or in other marketable securities, grasps a simple but important concept that is lost on so many market pundits and practitioners: stocks are not abstractions. Stocks are certificates that represent a share of ownership in an underlying business. Too often people don't look through stocks to the underlying business they represent. This book aptly is subtitled, "Lessons for Corporate America", because Mr. Buffet is after all an evaluator of businesses. Stocks and their prices are only relevant when they become disjointed, in a favorable way, from the underlying realities of the business they represent. To think the "Buffet Way" takes more, though, than knowing the concept's basic precepts. It takes discipline, and a stoic fight against the animal spirits that so often lead investors astray. This book and its precepts are worth reading, and rereading, until hopefully its lessons are engrained in the psyche in a way that they become impossible to ignore.

For all of you investors who want to invest like Warren Buffett - that is, successfully - this is what you really want to read. There are a large and growing number of books out there that will claim to make you think/act/be like Buffett; here you can actually read his thoughts. As WB has often said, go to the source material (not the analyst reports, etc.) to make your judgments, and that is true in studying Buffett as well. On top of that, Buffett is a much better writer than most of his biographers. The editor of this compilation has done a good job of organizing Buffett's writings into themes with a light hand. You get a good idea of how Warren thinks. Buffett has an amazing way of penetrating the thick coating of B.S. that covers most of what passes for investment theory nowadays. He ruthlessly applies Ockham's Razor to cut things down to their essential truths; two of the most basic are that owning stock in a company is truly owning part of a business and that the future is full of uncertainty. Obvious, right? But, when you really absorb these concepts the answers to the questions of when and why you should buy a stock become much clearer. I won't attempt to boil down any more of his thoughts - you can find plenty of that elsewhere. Suffice it to say that, although I am a Chartered Financial Analyst and have advised others regarding investments for over 20 years, when reading this book I had many "V-8 moments" - where you want to slap yourself on the forehead and say "of course!" While I first heard of WB many years ago (before he was cool), this book was my first significant exposure to his writings. He writes well, with wit and wisdom, and makes fairly complex subjects amazingly accessible to the uninitiated. I wish I had read this book much earlier, but I'm not sure if I would have been mature enough to put much of it into action anyway. One thing to keep in mind when you hear about all the easy ways to make money from following charts, or are tempted to buy the latest idea emanating from your brother-in-law - or a talking head on CNBC: what Buffett does REALLY works. To put it crudely, it isn't an accident that he is, per Forbes, the 2nd richest man in the world - out of over 6 billion people. (I haven't seen any chartists make the list yet.) If you are really a serious investor, why would you NOT want to read what he has to say? However, I can tell you why you probably won't actually put into practice most of what he says - it's no fun! It's no fun (for most) reading 10-Ks and 10-Qs. It's no fun keeping your own council and avoiding the crowd. Also, why wait, perhaps for years, for the "fat pitch" of a great company at a great price when you can get your kicks day-trading? After all, if most people were willing to wait until the odds were truly in their favor before they risked their money, lotteries would disappear and Las Vegas would be a dusty little village. Even those who acknowledge Warren's achievements and study his words will find putting his seemingly obvious concepts into action surprisingly difficult. But that is how you actually earn the money. Finally, here's a story, retold by Buffett, that illustrates the herd mentality you must overcome to succeed. I quote: Ben Graham told a story 40 years ago that illustrates why investment professionals behave as they do: An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. "You're qualified for residence", said St. Peter, "but, as you can see, the compound reserved for oil men is packed. There's no way to squeeze you in." After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, "Oil discovered in hell." Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. "No," he said, "I think I'll go along with the rest of the boys. There might be some truth to that rumor after all." -Warren Buffett, Berkshire Hathaway Letter to Shareholders, 1985

There are many things that make Warren Buffett an incredible person. Obviously he is the most successful investor the world has ever seen but this is compounded in achievement by a his level of integrity and his genius for displacing risk in the process. He's done it his way, without feats of risk, financial engineering, or magical inventions. This makes his wisdom all the more compelling and makes this book easily the best comprehensive book of business wisdom ever written. His business partner Charlie Munger has reflected on this unrecognizable genius - "people think Warren and I leap 10 feet fences in a single bound, when in reality we simply step over 1 foot fences". I have read this book at least 8 times cover to cover and like a fine wine it gets better with age. The magic of Warren's wisdom is rooted in his basic understandings of human nature, durable value propositions, the role of accounting, the dangers of precision and the simplicity of common sense. The more you read this book, the more wisdom is revealed to the reader. An example of this wisdom is buried in one of his favorite sayings "I would rather be generally right then precisely wrong". Seems like a harmless enough saying but if you take the time to digest his meaning it is incredible advice. How else could a single person digest volumes of information and make multi-billion dollars purchases in 15 minutes while avoiding high-priced investment advisory teams and months of due diligence work. To mortals this appears bonkers, but to Warren as conveyed by this saying if the opportunities aren't obvious enough and don't jump out to you then they simply aren't worth doing at all. This book has made me a better investor and has allowed me to achieve professional goals I once thought to be unachievable. Highly Recommended - Thanks Warren for sharing your wisdom with the world, easily my most favorite book on business!

Really enjoy Mr. Warren Buffet's humor :)

Do you want to know how to beat the market this year? Well this book is not for you. You'd like to read a book on fortune telling! This book describes what a successful business looks like. Every aspect of the business that matters to an owner is pretty much covered in this book. From the proper incentive for managers to the proper way of evaluating the business, Warren Buffet is expressing how you can own a wonderful business... And oh yeah making an egregious amount of money sort of takes care of itself once you discover and own a successful business at a discount. With his clear writing and delightful sense of humor, this book is superbly entertaining as well as educational. The sectioning of the book is logical and the flow is very well preserved by the editor, even from different letters on different years. It is hard to imagine any comprehensive education on business without this book. I enjoyed it immensely and consider it very valuable in a lifetime on investing that I have ahead of me... Maybe I'll check back in 20 years and tell you then whether this book was as useful as I thought!

MERCI PARFAIT

Me gusto , es muy interesante.

If you believe in following best practice and then implementing your own improvements this is definitely a book worth reading . It covers most of Buffet's annual letters to Berkshire shareholders in a chronological manner easy to follow . What makes Buffet's writing so enjoyable is the way he helps the layman understand the world of investing . It also accounts for some of the mistakes that he and his partner Charlie Munger has made and we can learn from and hopefully avoid . My only regret is not getting the paperback version since then I could have shared this book with so many more people that could have benefited from reading the book themselves .

Good

Magnífico libro lleno de sabiduría en torno a temas como informes anuales, contabilidad o prácticas corporativas que no es posible encontrar en ningún otro. Imprescindible para el inversor.