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.


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I couldn’t simply mark this as “read” as I normally do. I had to review it and encourage others to read it.

It’s a more challenging read for those unfamiliar with corporate vernacular, but still highly approachable. I occasionally had to google vocabulary words or research concepts I was unfamiliar with. But Buffet is a business sage who speaks frankly enough that almost everyone benefits from reading these essays, on some level.

Straight from the horses mouth, this book provides context to his methods, beyond the over-simplistic sound bites you often hear. Beyond that, this was by far the most insightful book on “business,” in general, I’ve ever read. I’ll likely read it again.

3.5

learned a lot! a bit dry though

They don't call Buffett the Oracle of Omaha for nothing, and you'll find many reasons why in this compendium. Few writers translate complex concepts into memorable examples so well.

The book covers deep insights into economics and business. Buffett's wisdom is not limited to investing, but extends to insights into business operations and economic trends. Overall, reading this book may give you a greater focus on long-term value investing, rational decision-making, risk management, and a deeper understanding of the economy and business. These realizations can have a positive impact on personal financial planning and investment decisions.

A little dry to read, but gives incredible insight into one of the best investors to ever live.

There's a lot of takeaways from Buffett's essays, but the big one for me is that sticking to what you know and can excel at is not a weakness, but a strength. Don't try to over extended yourself beyond the limits of your expertise ("Circle of Competence").

I read this for my class, and while it was insightful, it felt repetitive and boring. Maybe that's a sign I hate my major lol

My expectation before I started reading this book (as with books of this nature) was to understand how Buffett pins down a purchase.
- How does he think company A is better than company B, even if both are in similar business
- How does he arrive at a measure of intrinsic value
- How does he estimate the 'margin of safety'
('How does he exit' is probably not such a great question because Berkshire Hathway's fav holding period is 'Forever')

What I would say is rather than give exact answers, Buffett leads us through his thought process. He is miles ahead than many because he has the ability to question the standard approach. The book shares his view on a wide variety of issues that come about when you consider a "business" and it is here that you realise how important the approach of looking at an investment as "part-owner" is.

I started with this book with a sort of apprehension. I don't have much domain knowledge in Finance and thought how I will be able to understand the jargon. One read later I can say that I already understand some of the things a little bit better. Although I skimmed some part of the essays because they didn't make much sense to me right as of now, I feel I will definitely be coming back to this book to read in its entirety.

The essays talked about various things. Here I put some of the most salient things. You might consider them spoilers but there are no spoilers in non-fiction. Yet SPOILER WARNING!!!!!


1.tA Company is the sum of its management:
-tDirectors therefore must be chosen for their business savvy, their interest, andttheir owner-orientation - Owner like attitude of the directors
-tThe outside board members should establish standards for the CEO's performance and should also periodically meet, without his being present, to evaluate
-tToo often, directors are selected simply because they are prominent or add diversity to the board. That practice is a mistake.
-tAn owner on the board should be the most effective in insuring first-class management.
-tBetter managers make better company –One of the point buffet emphasized was to attract and keep outstanding managers to run our various operations. They unfailingly think like owners (the highest compliment we can pay a manager) and find all aspects of their business absorbing.
-t"If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants."



2.tReturns should not be everything:
-tYou won't close down businesses of sub-normal profitability merely to add a fraction of a point to our corporate rate of return. However, I also feel it inappropriate for even an exceptionally profitable company to fund an operation once it appears to have unending losses in prospect. Adam Smith would disagree with my first proposition, and Karl Marx would disagree with my second; the middle ground is the only position that leaves me comfortable.
-tWe look at the economic prospects of the business, the people in charge of running it, and the price we must pay. We do not have in mind any time or price for sale. Indeed, we are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate.


3.tAn astute approach to market up and downs:
-tIf we have good long-term expectations, short-term price changes are meaningless for us except to the extent they offer us an opportunity to increase our ownership at an attractive price.
-tBerkshire and its long-term shareholders benefit from a sinking stock market much as a regular purchaser of food benefits from declining food prices.
-tThe key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values.
-tYou should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market you don't belong in the game.
-tIn my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace.
-tThe market may ignore business success for a while, but eventually will confirm it. "In the short run, the market is a voting machine but in the long run it is a weighing machine." 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.
-tSometimes, of course, the market may judge a business to be more valuable than the underlying facts would indicate it is. In such a case, we will sell our holdings. Sometimes, also, we will sell a security that is fairly valued or even undervalued because we require funds for a still more undervalued investment or one we believe we understand better.
-t"As time goes on, 1 get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.
-tAn investor needs to do very few things right as long as he or she avoids big mistakes.
-tWhatever the outcome, we will heed a prime rule of investing: You don't have to make it back the way that you lost it.
-tOur goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.


4.tBuy a stake in the company as if you own a business:
-tfirst, try to assess the long-term economic characteristics of each business; second, assess the quality of the people in charge of running it; and, third, try to buy into a few of the best operations at a sensible price.
-tIf at first you do succeed, quit trying.
-tOur goal is to find an outstanding business at a sensible price, not a mediocre business at a bargain price.
-tThe best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.
-tFirst, we try to stick to businesses we believe we understand.
-tSecond, and equally important, we insist on a margin of safety in our purchase price. If we calculate the value of a common stock to be only slightly higher than its price, we're not interested in buying.
-tYou simply want to acquire, at a sensible price, a business with excellent economics and able, honest management. Thereafter, you need only monitor whether these qualities are being preserved.
-tOur reaction to a fermenting industry (a new initiative which we don’t understand fully) is much like our attitude toward space exploration: We applaud the endeavor but prefer to skip the ride.
-tYou can, of course, pay too much for even the best of businesses.
-tYou only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.
-tYour goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.
-tIf you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value.
-tIt's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
-tLethargy bordering on sloth remains the cornerstone of our investment style
-tIn investing, just as in baseball, to put runs on the scoreboard one must watch the playing field, not the scoreboard.




5.tTHE GOAL of investment:
-tDirectly owning a diversified group of businesses that generate cash and consistently earn above-average returns on capital. That is for every dollar spent how much am I getting back?
-tThe key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values.
-tWe look at the economic prospects of the business, the people in charge of running it, and the price we must pay. We do not have in mind any time or price for sale. Indeed, we are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate.
-tDon’t watch the ticker: In investing, just as in baseball, to put runs on the scoreboard one must watch the playing field, not the scoreboard.


6.tEven Great Operations in unprofitable industries yield peanuts:
-t"A horse that can count to ten is a remarkable horse-not a remarkable mathematician." Likewise, a textile company that allocates capital brilliantly within its industry is a remarkable textile company-but not a remarkable business.

-tShould you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.

-tWhen a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.


7.tFocus on Value Investing:
-tThe value of any stock, bond or business today is determined by the cash inflows and outflows-discounted at an appropriate interest rate-that can be expected to occur during the remaining life of the asset.
-tThe investment shown by the discounted-flows-of-cash calculation to be the cheapest is the one that the investor should purchase-irrespective of whether the business grows or doesn't, displays volatility or smoothness in its earnings, or carries a high price or low in relation to its current earnings and book value.
-tIn our view, though, investment students need only two well-taught courses-How to Value a Business, and How to Think About Market Prices.
-tYour goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.
-tIt's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
-tIn analysis of operating results-that is, in evaluating the underlying economics of a business unit-amortization charges should be ignored. What a business can be expected to earn on unleveraged net tangible assets, excluding any charges against earnings for amortization of Goodwill, is the best guide to the economic attractiveness of the operation. It is also the best guide to the current value of the operation's economic Goodwill.


8.tDividends , Reinvestment and stuff:

-tShareholders would be far better off if earnings were retained only to expand the high-return business,

Cunningham organizes the essays within seven sections between Buffett's Prologue (Pages 27-28) and his Epilogue (Pages 273-282):

I Corporate Governance
II Corporate Finance and Investing
III Alternatives to Common Stock
IV Common Stock
V Mergers and Acquisitions
VI Accounting and Valuation
VII Accounting Policy and Tax Matters

As Buffett explains in his Prologue, members of Berkshire Hathaway's shareholder group receive communications directly "from the fellow you are paying to run the business. Your Chairman has a firm belief that owners are entitled to hear directly from the CEO as to what is going on and how he evaluates the business, currently and prospectively. You should demand that in a private company; you should expect no less in a public company. A once-a-year report of stewardship should not be turned over to a staff specialist or public relations consultant who is unlikely to be in a position to talk frankly on a manager-to-owner basis."

Those who share my own keen interest in Warren Buffett's leadership and management principles will learn a great deal from a careful reading of these essays. They are quite literally "from the horse's mouth." The substantial value-added benefits include the fact that Buffett thinks and writes so clearly, duly acknowledges bad decisions and personal regrets (yes, there were several), explains what he learned from them, and meanwhile reveals a playful (albeit dry) sense of humor. He also includes a number of personal observations about America, especially about its culture and economy, at various times throughout the last 25-30 years. The two aforementioned biographies indicate that throughout his life, Buffett thoroughly enjoyed each and every opportunity to increase others' understanding of sound business principles that include but are by no means limited to investments.

Whenever I'm reading Warren Buffets words, I feel I'm having a peak on a brain of someone very sharp. This collection of selected essays on corporate finance topics is now slightly outdated, yet still informative and pleasurable to read.