Fourth Edition - The Essays of Warren Buffett - Lessons for Corporate America

I wrote the original review of this book many years ago and with the release of the new edition I wanted to add a few comments. Over the years the book since the book was published I always keep a copy of it close by as it has served as THE quick reference source for me whenever I want to review a topic that Warren has covered in his letter to shareholders. For instance dividends at Berkshire has been a big topic of conversation over the last couple of years and when I wanted to review what he had said on the topic all I had to do was open to the table of contents, see what page the coverage of the subject started (page 178), and I was able to read all his comments on the subject without having to find and flip all his individual letters. In short if you have any interest in Warren Buffett this will become an invaluable and time saving resource which I couldn't recommend highly enough.

My original review:

This book is a great, well organized compilation of Mr. Buffett's famous "Letters to Shareholders" which appear in the annual reports of Berkshire Hathaway.
It has been recently updated to include the letters to shareholders written since the book was first released in 1996, a new introduction has been written, and a new, tougher, blue cover has been added. Mr. Buffett advised shareholders at the 1999 & 2000 Berkshire Hathaway annual meeting if he had to pick a single book describing his methods, this would be the one. It is a great tool to use when trying to compile Mr. Buffett's comments on a particular subject since it is organized by subjects he has discussed in his letters over the years. Trying to find all of his comments on a particular subject throughout the annual reports is a time consuming task when you have to look through many years worth of annual reports. Mr. Cunningham has made this task much simpler with this book.

A nicely done job of weaving together decades of Berkshire Hathaway annual letters. For me, it was a solid introduction into aspects of the economy, finance, and corporate governance that I have no prior teaching to guide me. At times, it gets painfully detailed and technical from the accounting standpoint, but that may be the nature of things.

must have. the only buffet book with his actual words. buffet himself says it is the best book about him. he says all other books about him all have mistakes. according to an interview granted to liz clayman of cnbc.

Great summation of Buffets ideas in his own words. Book does a great job of showing the evolution over time without needing to read every letter in full. The book also does a great job organizing thoughts into themes which help you quickly re-reference ideas later without spending all day looking for where you saw it.

Without a doubt, The Essays of Warren Buffett : Lessons for Corporate America was a definitive and clear insight into the mind of a genius - just see my review for this first edition. The Second Edition, however, adds another dimension reflective of today's business and investing environment.

Specifically:

Corporate Governance
- addition of "Audit Committees" section. As usual, a frank and down-to-earth assessment of just how honest an "audit committee" can be (it can't) - great addition, brings investors back to reality for believing these jokers.

Corporate Finance and Investing
- addition of "Debt" section, and in particular how Berkshire views debt, a section just about every business owner (home-owner too!) and profit/loss manager should read.

Alternatives to Common Stock:
- addition of "Foreign Currencies and Equities" section. Frankly, the decline of the dollar has made this topic of relevance to all investors - but Berkshire still loves America's "dynamism and resiliency." Yet another great, topical addition.
- addition of "derivatives" section. Hedge funds have made this a household term, yet don't be fooled. Not surprisingly, Charlie Munger and Warren call them "time bombs."

Accounting and Valuation:
- addition of "Accounting for Mergers" section. Here, Charlie and Warren put forth their idea for dealing with accounting for acquisitions, whether it be "purchase" or "pooling."
- addition of "Some Insurance History and Accounting" section. True to its name, Warren guides the reader from the birth of Lloyd's, through the asbestos crisis to Berkshire issuing a massive retroactive reinsurance contract. If you invest in Berkshire, you'll want to read this section too.

In all, this updated version provides investors with a timely resource for investing in today's world. Additionally, all managers (and professionals who want to grow) should read this book because here, Cunningham neatly organizes selections from Warren Buffet's annual essays and guides them through a tough-minded, down-to-earth and common sensical manual for reference in today's (sometimes exceedingly) complex business environment.

For these reasons, this reviewer highly recommends "The Essays of Warren Buffett: Lessons for Corporate America" - Second Edition.

It's debatable whether the editing job is worth the price. You could easily look up all of Warren Buffet's Berkshire shareholder letters online for free. However, Cunningham does a great job of connecting themes from different years/letters and so I believe the cost was worth the editing job. Great read.

My investing strategy completely changed after reading this. I had already shared some core ideas, apparently, but others I completely changed as a result of reading this book. It's more than worth it's worth in Gold.

If you are into capital allocation, this is the book to read. If you are CEO of a corporation this is the book to read. If you are an entrepreneur, this book gives you insight into what to do with your capital if you become successful.

The thing that strikes me in reading this book is the amazing moral standard that Buffett maintains. Oh, that more of the corporate world would practice his ethics. You're in for a treat with this read.

I would not recommend this book to everyone, because he uses some advanced economic terms that some people wouldn't understand. However, I was able to understand most of what he was saying and it was an interesting perspective on how he invests in companies; I'd never thought of investing quite the way he does. It is a good book and I'd recommend it to anyone with a background in economics.

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.

A bit repetitive and sometimes dry but what do you expect from a book pieced together from annual reports. Thank God Warren Buffett is an excellent story teller. Beyond that, the information in this book is invaluable.

I would not recommend this book to everyone, because he uses some advanced economic terms that some people wouldn't understand. However, I was able to understand most of what he was saying and it was an interesting perspective on how he invests in companies; I'd never thought of investing quite the way he does. It is a good book and I'd recommend it to anyone with a background in economics.

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.

A bit repetitive and sometimes dry but what do you expect from a book pieced together from annual reports. Thank God Warren Buffett is an excellent story teller. Beyond that, the information in this book is invaluable.

This is a well-formatted collection of the Buffett's various essays. Buffett has a magical way of writing complex financial topics in an enjoyable, folksy way. More importantly, this book will make you a better investor.

This is a great book! Anyone who is interested in the mind of Warren Buffett and want to learn about how he makes his investment ideas should get this book.

This is a must read for beginner investors and a good refresher for experienced ones.

Talk about a boring book, this thing sucked. But he's rich, must be doing something right. I read that some people said this was the most important book they have ever read..I read one chapter because I had to for an investment class, it's a lot of common sense

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.

This is a review by eqtbooks.com

'The Essays of Warren Buffett' really do provide lessons for corporate America, as claimed; they also provide important lessons for investors. I especially like his succinct observations. In his opening essay he reports that Berkshire has two low-cost, non-perilous sources of leverage - deferred taxes (Berkshire retains all earnings) and 'float' (funds of others held by its insurance companies - have broken even over his tenure), totaling about $12 billion. These are liabilities w/o covenants or due dates. 'Beware of companies that do not expense options or employ fanciful pension assumptions,' he says. EBITDA is a misleading measure of performance - depreciation applies to cash outlays made before an asset delivers any benefits. Unintelligible footnotes usually indicate untrustworthy management (eg. Enron). Be suspicious of companies that trumpet earnings projections and growth expectations - the world is full of surprises that can make them into fantasies.

The supreme irony of business management is that it is far easier for an inadequate CEO to keep his job than for an inadequate subordinate. CEO performance standards either don't exist or are fuzzy, often explained away (eg. the weather, economy, competition). Another reason - relations between a CEO and the board are expected to be congenial. Successful CEO performance is usually more a measure of the industry than the CEO; it is usually better to abandon a leaking 'boat' (business in a struggling industry) than to try patching it.

Buffett does not sell holdings just because they've appreciated or been held a long time; only if the market overvalues them or the prospective return on capital becomes unsatisfactory or there are concerns about management.

Controlling a company (vs. owning parts via marketable securities) offers two advantages to Berkshire: 1)It gets to direct the allocation of capital; Buffett believes most CEOs are not good at this), and 2)the tax code provides financial benefits as much as 50% better when they come from an 80% or greater holding.

Growth benefits investors only when the business can invest incremental returns at enticing rates; growth in a low-return business requiring incremental funds hurts investors.

What counts for most people in investment is not how much they know but how realistically they define what they don't know - eg. complex and/or constantly changing businesses; Buffett stays away from both. An investor will do better in a secondary market than buying new issues - the latter is ruled by controlling stockholders/corporate leadership who are not going to offer any bargains. Buffett purchased a 10% interest in Wells Fargo at less than 5X after-tax earnings (less than 3X before-tax earnings).

'Beware of past performance "proofs" in finance. If history books were the key to riches, the Forbes 400 would consist of librarians.'

Evaluating a company's ability to pay interest while ignoring depreciation is delusional - capital expenditures are as real as labor or utility costs. Ignoring interest accruing on zero-coupon bonds as well is even worse, assumes a renegotiation of the bonds when they come due. Wall Street, however, loves these - deals can be made at prices no longer limited by actual earning power, allowing more deals. Thus, investment bankers become promoters. Many failed S&Ls bought these.

Berkshire carries all stocks at their market value on its balance sheet; changes in value do not impact earnings until the asset is sold. (Exception: Changes in currency valuations are reflected into earnings.) Derivatives generate reported earnings that are often wildly overstated and based on inaccuracies that may not be exposed for many years. Often there is no real market and 'mark-to-model' is utilized. Errors in doing such have not been symmetrical and almost invariably favor the CEO and/or trader eyeing large bonuses via reporting impressive 'earnings.' Buffett tries to avoid companies with significant post-retirement liabilities.

Foreigners now earn more on their U.S. investments than we do abroad ('06). Buffett is quite concerned about our large, growing cumulative trade deficits - foresees a cumulative $11 trillion by about 2016 when GDP reaches $18 trillion, costing about $550 billion/year in debt service alone. A greatly declining dollar has not provided a solution.

And so it goes, fascinating and valuable all the way.

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

If you are used to reading public company annual reports, including the (usually) short letters from company presidents, you know how shallow, self-congratulatory and sometimes even misleading these reports can be. On the (extreme) other hand, Warren Buffett's annual letters in his Berkshire Hathaway annual reports represent detailed, on-target, lively and highly readable masterpieces of valuable education, information, and wit. You can read Buffett's annual letters for free at Berkshire Hathaway's website, but it will take you a while, since there are many of them (back to 1977) and they run 20+ pages each. Further, Buffett's various letters weren't intended to serve as serial chapters of a book. Better, you can shell out the cost of Lawrence Cunningham's thematically organized collection (220 pages or so)of Buffett's essays and gain a better appreciation of the numerous important topics that Buffett addresses. These topics include, first and foremost, the critical impact of the quality of corporate governance--Buffett was years ahead of most investors in focusing on this area. Other topics include corporate finance (addressed with a clarity that is both unusual and revealing of Buffett's powers of insight), mergers and acquisitions, accounting (Buffett is the only person I know who can regularly make accounting seem positively interesting), taxes, junk bonds and much more.
Moreover, Buffett's Berkshire Hathaway is nearly unique in its intense commitment to shareholders. The opposite (a commitment to management entrenchment and exorbitant compensation) is the norm with so many companies today that it would be easy to forget how vital shareholder primacy should be. As you read Buffett's essays you will have a model to measure other companies against--which should come in handy the next time you exercise your voting rights as a shareholder.
Life is short. As an investor or a concerned citizen-shareholder, you can learn through your own experiences, of course. There's nothing wrong with that, but the process can be long and expensive. (Depending on one's experiences, it can be very expensive.) Alternately, you can learn via Warren Buffett's lifetime of experiences distilled into a very readable, lively, fascinating collection of his essays. Buy the book-I doubt that you'll regret it.

This book collects all the essays which Warren Buffett wrote, which in essence is his Berkshire Hathaway chairman's report, and arranges them neatly in order so the reader isn't confused. The great thing about this, is that you don't have to go digging through mountains of statistics and figures just to find Mr Buffett's words of advice and wisdom. This is especially good for non Berkshire shareholders who haven't had access to the reports since day one. The Berkshire reports tends to assume that you've been following them in order hence if you start off with the 1993 one, you'll probably end up all muddled.
Now as we all know, there are loads of books dedicated to Mr Buffett and proclaim to be able to help you use Mr Buffett's wisdom and turn yourself into Warren Buffett Jr. What makes this book stands out from the others is that it doesn't make any attempt to interpret or analyze Mr Buffett's investment technique nor does the author try to give advice to the reader. Its all Warren Buffett plain and simple. In defence of the accusation that this book is [not great]since you can get everything from the reports, I'd just like to point out that this book never made any attempt to be anything but exactly what appeared in the Berkshire annual reports. If you are comfortable with the numbers that appear in the report, by all means continue with the report. This book is merely attempting to makes your life much easier if you don't want to pound your head needlessly figuring out the figures that plague the report, but yet be able to access Mr Buffett's wisdom. Also I'd like to point out that Warren Buffett has never written any books apart from what appeared in the annual reports. In escence Larry Cunningham has created the book Warren Buffett has never written. All the others which the authors offer their opinion on the investing style has diluted Mr Buffetts wisdom and you now have to sort out which is the author's own conviction and which one is authentically Warren Buffett

Basically a collection of letters by Buffett where he shares his perspectives. He's very easy to understand and follow. His discussion on dividend policy and share buy-backs really left an impression for me, but there's a load of other subjects: conflicts of interests with management, acquisitions, etc. The book itself is sorted by subject, not chronology.

Also, let's not under-estimate that Buffett is an extremely talented manager (Berkshire Hathaway is basically the world's largest conglomerate), and we can all take a lesson from him on how he encourages his employees; you'll see a lot of "honest compliments" that Warren hand's out, similar to what is preached by Dale Carnegie. Some of the material you can still find in his annual letters to share-holders.

This collection of essays by Warren E. Buffett, compiled by Lawrence A. Cunningham, is an excellent introduction to basic investment concepts that have proven successful for the 'Oracle of Omaha' and his loyal following. The reader will want to supplement these papers periodically with more timely updates from the annual letter Buffett writes to the shareholders of Berkshire Hathaway. Buffett's ideas have been widely reported so there are no surprises here. To be sure, Buffett is consistent. He pokes fun at the 'efficient market' school which confuses stock price with stock value. Early on we hear him calling for the expensing of stock options and urging more transparent, segmented financial reporting by large companies. For Buffett mechanically rebalancing portfolios to achieve diversification, back in fashion, may miss the point of holding-on to your best investments for superior returns. Distinguishing between Growth and Value styles of investing is unnecessary and misleading. If you have ever wondered why Berkshire Hathaway does not pay a dividend or why it doesn't split its high stock price, Buffett gives his reasoned explanations. It was Warren Buffett's fundamental school mentor Benjamin Graham who introduced the allegory of Mr. Market and the concept of 'margin of safety' both of which get satisfactory attention here. Most importantly, I think, Buffett reminds us continually that as stock market investors we are buying for the long-term parts of real businesses that produce measurable cash flows as evidence of their intrinsic value. Real businesses that produce real value are run by dedicated, competent leaders who know how to allocate capital. Hanging-on to such deceptively simple principles can get an investor through some very rough market cycles. Reading this collection is a lot like listening to the conversation of an avuncular and very experienced elder who with great patience, common sense, and wit explains what principles have guided his (investment) life. Indeed uncommon sense and integrity are hallmarks of Warren Buffett's writings. Humor too. In what other serious investment study will you get quotations from such luminaries as Woody Allen, Mae West, and Yogi Berra. Buffett loves aphorisms to make his point. I challenge anyone reading this book not to underline or commit to memory some of these gems. For a general introduction to the fundamental school view of investing this collection is required reading.

In a news interview, Warren Buffet was asked about about the many books written about him and his philosophy. He explicitly likes one particular book- "The Essays of Warren Buffet: Lessons For Corporate America".

It reads like a series of college essays. More than the academics, it gives a perspective that is conducive to making quality stock picks. Warren Buffet's philosophy on stocks hinges on the premise that you are buying a company for the long-term and not the short-term. Thus, he invests on companies such as Coca-Cola, See's Candy, Fruit of the Loom, etc. There are not many (if any) dot com companies.

This is a quality book that is intellectually stimulating that makes practical sense (cents).

JR Felisilda
Author of the book, "Nanay: Lessons From a Mother"

For reasons perhaps known only to the store, reviews of all three prior editions of Buffett’s essays/letters are also included with reviews of this new (Fourth) edition. Therefore, I have no choice but to add it to my reviews of earlier editions. Here we go.

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There are several people I wish to thank for increasing substantially my understanding and appreciation of fundamental business principles. I am not – and never have been – an investor in stocks and bonds but have learned so much of value from the material Benjamin Graham provides in The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition). Warren Buffet is next, one of Graham’s students and later an associate. I have read all four editions of his essays (i.e. his letters to Berkshire-Hathaway shareholders), edited by Lawrence Cunningham whose introductions are exceptionally informative as well as eloquent. I am grateful to Carol Loomis for her entertaining as well as insightful book, Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013. Tho there sources I now add Jeremy Miller’s Warren Buffett’s Ground Rules: Words of Wisdom from the Partnership Letters of the World’s Greatest Investor.

According to Cunningham in his Preface to the FOURTH Edition, “The year 2015 marks the fiftieth anniversary of Berkshire Hathaway under Warren Buffet’s leadership, a milestone worth commemorating…As in previous editions of The Essays, this one retain the architecture and philosophy of the original edition but adds selections from Warren’s most recent shareholder letters, including his fiftieth anniversary retrospective [please see pages 287-299]. All the letters are woven together into a fabric that reads as a complete and coherent narrative of a sound business and investment philosophy.”

Ben Graham held that price is what you pay and value is what you get. These two issues are rarely identical, but most people who invest rarely notice any difference. With regard his influence, Cunningham observes, “One of Graham’s most profound contributions is a character who lives on Wall Street, Mr. Market. He is your hypothetical business partner who is daily willing to buy your interest in a business or sell you his at prevailing market prices…Another leading prudential legacy from Graham is his margin-of-safety principle. This principle holds that one should not make an investment in a security unless there is sufficient basis for believing that the price being paid is substantially lower than the value being delivered…The circle of competence is the third leg of Graham/Buffett stool of intelligent investing, along with Mr. Market and the margin of safety. This commonsense rule instructs investors to consider investments only concerning the businesses they are capable of understanding with a modicum of effort.”

Somehow Lawrence achieves both convergence and coherence with several dozen of Buffett's essays, written within a 35-year timeframe (1979-2014). The material does indeed read as “a complete and coherent narrative of a sound business and investment philosophy.” The eleven sections range from Corporate Governance to Berkshire at Fifty and Beyond. Over the years, I have accumulated more than one hundred Warren Buffett quotations and have selected these as indicative of the thrust and flavor of his perspectives.

o The best thing I did was to choose the right heroes.
o What we learn from history is that people don’t learn from history
o Someone is sitting in the shade today because someone planted a tree a long time ago.
o Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
o Chains of habit are too light to be felt until they are too heavy to be broken.
o It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
o Only when the tide goes out do you discover who's been swimming naked.
o It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
o Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.
o Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.

With regard to other sources, I also highly recommend these: Alice Schroeder’s The Snowball: Warren Buffett and the Business of Life, Roger Lowenstein’s Buffett: The Making of an American Capitalist, and Tren Griffin’s Charlie Munger: The Complete Investor.

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This is the Third Edition of an ongoing process by which Warren Buffett presents a "chairman's letter" (i.e. progress report with his unique reflections) to Berkshire Hathaway shareholders at their annual meeting. Lawrence A. Cunningham edited each of the three editions, with the latest including Buffett's annual letters to Berkshire shareholders since 2008, the date of the prior edition. Other new material includes:

o The financial crisis and its continuing implications for investors, managers and society;
o The housing bubble at the bottom of that crisis
o The debt and derivatives excesses that fueled the crisis and how to deal with them
o Controlling risk and protecting reputation in corporate governance
o Berkshire's acquisition and operation of Burlington Northern Santa Fe
o The role of oversight in heavily regulated industries
o Investment possibilities today
o Weaknesses of popular option valuation models

Some other material has been rearranged to deepen the themes and lessons that the collection has always produced:

o Buffett's "owner-related business principles" are in the prologue as a separate subject
o Valuation and accounting topics are spread over four instead of two sections and reordered to sharpen their payoff.

According to Cunningham, "Those who are familiar with The Essays will notice that we have made the cover snappier than has been our custom. (Thanks for the cover design to Tim Colton, of Carolina Academic Press, which will continue to partner with me in the distribution of the book.) The main reason: the book's traditional covers could be seen well in physical form but pictures of them, shown on the internet, could not. Since most sales are done over the Internet these days, the cover needed a face-lift.

"The adage remains, however, that one should not judge a book by its cover. This book should continue to be judged on its content and organization, in which a distinctive investment and business philosophy is coherently articulated. Thanks to the many fans of the book, first published in 1997. I hope you enjoy the updated edition. And I hope to see many of you in Omaha for the Berkshire shareholders' meeting in May."

With regard to the Third Edition's subtitle, "Lessons for Corporate America," my own opinion is that almost all of the lessons can be of substantial value to leaders in any organization, whatever its size and nature may be. Among Buffett's most important and yet least appreciated talents is his ability to establish a direct and personal rapport with each person he meets or who reads any of his letters as well as any of his articles such as those included in Carol Loomis' superb book, Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012.

I watched three segments of Buffett and Loomis' appearances on The Charlie Rose Show and their informal but gracious manner made me feel as if I had been a personal friend of theirs for many years. (I wish I had purchased Berkshire stock 50 years ago!) Credit Cunningham with brilliant editing as well as his own contributions to what continues to be a "moveable feast" of information, insights, wisdom, and wit. Once again, his Introduction (all by itself) is worth much more than the cost of the book as he again discusses with rigor and eloquence what he considers to be key points about Buffett and his leadership of Berkshire Hathaway in recent years.

As a professional business consultant and investor, I have read many of the books that claim to offer clarity and vision in the corporate world. This book alone truly offers that clarity of vision.
Buffett is the keenest observer of the workings of modern finance and businesses alive today. He blows away the smoke and mirrors, and lays out the truth underlying how the business systems actually work.
After reading this book, I read the other classic value investing titles ("securities analysis", "intelligient investor", et al), and then reconfigured my portfolio in a more buffettlike way (including a major purchase of Berkshire Hathaway equity).
My only concern with this book is that it is based on the ability to compare "current market price" of a stock with "current business value" of the business it buys. Sadly, it never gives a methodology (there are many) for determining analytically what that business value is. One can only assume that the methodology suggested is the one put forth by his mentor Graham in "Securities Analysis."
If "business analysis" was awarded a Nobel, Buffett would be making a trip to Stockholm, and this book is the layman's guide to his science.

The most famed investor of his time, Warren Buffett, has never written a book. Although there are dozens of books that are written about him, this is the only book in Buffett's own words. This collection of Buffett's writings on different topics come from his annual reports. It is true that you could go to the Berkshire Hathaway website and look at the annual reports yourself, but not everyone wants to flip through 15 annual reports. Moreover, this book is organized by topic and not by year, unlike the annual reports.

This is an invaluable for both investors and managers. I emphatically recommend this book to CFOs, investment bankers, financial analysts, and anyone else interested in corporate finance and business valuation.

For those people that wish to learn about Buffett's philosophy this is the book to read. Who better to learn about Buffett than from Buffett himself?

"The Essays of Warren Buffett" is a textbook on proper business practice used at Cardozo Law. Yeah, I know you can go to the Berkshire Hathaway website and get all of Buffett's letters to the shareholders (in fact those who truly want to know more can do this). But this book cuts to the chase. It is edited in such a way that the essays are grouped in a logical manner. Thus, you don't have to plow through all the letters ( which at times can be boring and redundant).This makes reading rather convenient and efficient. The parts of the book that are most useful for an individual investor are the sections on "corporate governance" (in which Buffett describes what makes a good CEO and Board) and on "corporate finance and investing" ( in which Buffett argues against the Efficient Market Theory and argues for the Graham-Dodd approach). I found the essays on "accounting and valuation" and "accounting policy and tax matters" a bit tedious (though the section on stock options was rather interesting).

There are plenty of books written about Warren Buffett, but what is a better source if not THE source: Warren Buffett. There are just so many lessons to learn from this book. I loved the section where Mr. Buffett explains the Cigar Butts investment style that he practiced before Charlie Munger convinced him to change his style into buying excellent companies at reasonable prices and holding them for a long time. Mr. Buffett is very good at explaining difficult concepts in simple terms that almost anybody can understand.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

If you are at all involved in business or investing, you should read this book.
NOTE: Though you can read all of Buffett's letters to the shareholders that are assimilated in this compilation through Berkshire Hathaway's website, I found this compilation quite helpful and much more "user-friendly" than clicking through links upon links of letters.
As far as material is concerned, Buffett speaks to the masses as the messiah of capitalism- not that he would ever claim such a title. As a recent college grad, I found that I learned more from reading Buffett's writings than I learned in numerous college courses. The material in his letters is simply that insightful. Did I mention that Buffett is a funny old guy? That all comes through in these letters, as well. In another life, Buffett would have made an excellent teacher. Fortunately, Buffett likes to talk - he wants to share his understandings and insights, the thoughts of the master: his letters or "essays" are those thoughts. And what a nice little book in which to read them. I know that I am better off as an investor and as an academic for reading them.
I will undoubtedly re-read this book at least once more. I cannot give it any higher recommendation.

Solid historical advice from the world's richest man, investor Warren Buffett. This was first published in 1997. This is a collection of letters Buffett wrote to his Berkshire Hathaway shareholders over the years. Buffett is the foremost authority on value investing today. Reading Buffett and about Buffett is considered essential by any serious investor. Buy this book if you want a printed copy. This 5-star advice is now available on the Berkshire Hathaway website so I can only rate the book 3 stars.