A great read for anyone who wishes to learn more from the god of investment - which should refer to EVERYONE. However, because of the limited depth of his annual letter to shareholders, some of the topics discussed in this book is not explored in as much details as desired by a diligent student....Continua
This is a collection of Warren Buffett's letters to shareholders of Berkshire Hathaway. It is excellently selected and arranged by Cunningham so it reads like a book.
Buffett is an extraordinary communicator. He conveys his insights in language and mathematics that most people understand. He clearly knows his stuffs well, as reflected by the amazingly simple examples and stories he uses throughout. Some examples:
On stock price:
"If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? ... If you expect to be a net buyers of stocks in for many years to come, should you hope for a higher or lower stock market during that period?"
On fixed-price stock options:
"A savings account in which interest was reinvested would, at 8% interest, quadruple its annual earnings in 18 years ... Many stock options in the corporate world have gained in value simply because management retained earnings, not because it did well with the capital in its hands."
How could you paint an accurate picture by excluding depreciation, depletion, and amortization without including the "amount of capitalized expenditures for plant and equipment, etc a business requires to fully maintain its long-term competitive position and its unit volume"?
On whether stock options should be booked as expenses:
"If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And if expenses shouldn't go into the calculations of earnings, where in the world should they go?"
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I haven't read any other books about Warren Buffet or his ideas. But I suspect if you are to read only one, this is it....Continua