Warren Buffett

Warren Buffett
SPEAKS
Wit and Wisdom from the World’s
Greatest Investor
Completely Revised and Updated
JANET LOWE
John Wiley & Sons, Inc.
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Warren Buffett
SPEAKS
Wit and Wisdom from the World’s
Greatest Investor
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Warren Buffett
SPEAKS
Wit and Wisdom from the World’s
Greatest Investor
Completely Revised and Updated
JANET LOWE
John Wiley & Sons, Inc.
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Copyright © 2007 by Janet Lowe. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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ISBN 978-0-470-15262-1
Printed in the United States of America.
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To my patient family.
—JCL
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Contents
Acknowledgments
Introduction
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ABOUT LIFE
Omaha? Omawhere? Omawhat?
Live how you want to live
Eat what you want to eat
Have a hobby
Be passionate
Aim high
Aim well
Focus on your goals
Keep life in perspective
Be honest
Tell the whole truth, please
Letter to the Wall Street Journal
Cultivate good character
Believe in yourself
But don’t get too stuck on yourself
Dodge the hype
Share your wisdom
Disregard old age
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ALSO:
Attention Investors: Warren Buffett is
crossing the street
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Nice guys finish first—sometimes
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Choose your heroes well
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Rose Blumkin, matriarch of the Nebraska
Furniture Mart
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ABOUT FRIENDS
Know what friendship is
Go to bat for your pals
Guiding Governor Schwarzenegger
Build lifelong friendships
ALSO:
Charlie Munger
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ABOUT FAMILY
Don’t spoil your kids
The Buffett children
Work things out with your wife
Be kind to your mother
ALSO:
What others say about Warren Buffett
Astrid Menks, Buffett’s second wife 78
The controversial Susan T.
Buffett Foundation
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What Leila Buffett had to say about
her son
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What the critics say
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ABOUT WORK
Work for the fun of it
Start early
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Contents ix
Work where you want to work
Work with good people
Give a pat on the back
Be loyal to your partners
Guard your time
Know when to quit
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ABOUT RUNNING A BUSINESS
Communicate well
Know when to say no
Set an example
Take care of shareholders
Hire well, manage little
Put a premium on experience
Be smart about allocating capital
Be brave
Use crossover skills
The mighty machine called Berkshire Hathaway
ALSO:
The Berkshire Hathaway annual meeting
Goodbye to a good idea
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The Salomon scandal
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Berkshire Hathaway online
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ABOUT INVESTING
Have a philosophy
Recognize the enemy: inflation
Experience epiphany
Never mind what the professors say
Meet Mr. Market—your servant, not your guide
Ignore Mr. Market’s moods
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Listen for opportunity’s call
Know the difference between price and value
Seek intrinsic value
Expect to be out of step
Earnings, earnings, earnings
Look forward, not back
Avoid risk
Don’t gamble
Watch for unusual circumstances
Don’t be surprised by circumstances
Avoid excessive debt
Look for screaming bargains
Arbitrage when possible
Be patient
Think for yourself
Have the right tools
Be wary of Wall Street
Only buy securities that you understand
An old dog prowls new markets
PetroChina
An expanding circle of competence
Buy reading glasses
Become an investigative reporter
Keep it simple
Think big
Know what you’re looking for
Don’t sweat the math
Admire frugality
Set realistic goals
Face facts
Expect change
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Be capable of change
Admit your mistakes
No thumb sucking
Join AA (Airlines Anonymous)
Learn from your mistakes
Buy storybook stocks
Seek excellent companies
Stick with quality
Junk bonds
Appreciate franchise value
Respect pricing power
Find a company with cheap float (then try
to not misplace the company)
Learn to like Monopoly
Find managers who think like owners
Management is important, but a good
company is more important
Avoid the Institutional Imperative
(the tendency for corporations
to act like lemmings)
Favor companies that repurchase their
own stock
Don’t worry about diversification
Invest for the long term
To sum up
And when you’ve become wealthy by following
in the footsteps of Buffett, pay your dues
to society
Investing is one way of contributing to the public
well-being
When rewards are disproportionate
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Pay your taxes and don’t complain
Give as generously as you receive
Thoughts on charitable giving
Will Buffett’s gift affect the company?
The last word
ALSO:
Benjamin Graham
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The Used-Cigar-Butt School of Investing
He tells them, but they don’t listen
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Baby Berkshire shares
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What does the Bill and Melinda Gates
Foundation do?
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Berkshire’s Book Value vs. the S&P 500
Berkshire Hathaway Share Price
Time Line
Endnotes
Permissions
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Acknowledgments
Many generous people helped in the preparation of this
book. Thanks to Pam Buffett; Warren Buffett; Jolene
Crowley; Elizabeth Douglass; San Diego Union-Tribune;
Lorena Goeller; Arthur Q. Johnson; Steve Jorden;
Omaha World-Herald; Irving Kahn, Kahn Brothers;
Kathy Lowe; Bruce Marks; Charles T. Munger; The North
Carolina Public Television Foundation and the KenanFlagler School of Business, University of North Carolina,
Chapel Hill; Doerthe Obert; Walter Schloss of Walter &
Edwin Schloss; R. Hutchings Vernon; Kathy Welton; my
editor, Kevin Commins; and my literary agent, Alice
Fried Martell. Also, I am grateful to have been able to
talk to Susan T. Buffett, Katharine Graham, and Sequoia
fund founder William Ruane before their deaths.
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