The Essays of Warren Buffett: Lessons for Corporate America, Second Edition

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.

Warren Buffett advises us not to invest in stocks. We should invest in the businesses behind them. He is currently the second richest person in the world, after Bill Gates. He is also arguably the most successful investor of all time. Apart from a youthful apprentiseship with B Graham when he lived in New York, Buffett has always lived in Omaha and his approach to investmnent is a long way from Wall Street in every sense. His letters to shareholders are eagerly anticipated because they contain many simple nuggets of wisdom. Here are some themes that come out from his writings: (1). Stock-market prices for company's are driven by emotion, not truth, and the truth about a company lies in its "operating result" rather than its current stock price or its glossy forecasts; (2). You know the company's "intrinsic worth" and that the market will sooner or later recognises this. This is the essence of "value investing"; (3). Look for company's that have a "durable competitive advantage". Even if their stock price goes up and down, this advantage will naturally see them outperform other stocks; and (4). No matter how great the talent or effort some things just take time: you can't produce a baby in a month by getting 9 women pregnant.

Though I'm not a fan of Buffett, and I usually feel that his "wisdom" goes unchallenged in the media, in business circles and in academia because of his stature as an investor, this compilation is a great way to get a distilled collage of his annual report dissertations about many interesting subjects.
Of course one could just go to the website and read the reports, but the selection and organization makes it worth the price. It is very interesting to read some analysis of market turmoil times and think that you are reading about the present, to then at the footnote see that it was written 10 or 20 years ago. It puts today's economic crisis in perspective, and certainly makes the 2008 recession look like one of those opportunities that comes once every 20 years, and not like the apocalyptic event it is perceived to be in some quarters.
The fact that the book is the best compilation of one of the highest-regarded modern business philosophers earns the book 5 stars. The main ideas (and to me the most endearing) are that a corporation is a partnership and stock-holders, boards and managers should run companies with this "family-owned-for-the-long-term" attitude; that investing is about finding good businesses, with good and honest management, to be held for the long term, bought at discounted prices (with margin of safety), and that this should deliver wonderful results no matter what the vagaries of the market, political or social environment are.
But if Buffett was not a muti-deca-billionaire, some of his ideas would (and certainly should) be challenged with more vehemence, because his stature and his influence in an Obama administration could permeate the regulatory environment and infect the intellectual drinking well of policy-makers and rule-writers.
Buffett's analyses, metaphores, fables, simils, allegories and rants about subjects such as derivatives, low-grade bonds, financial advisory, all-stock mergers, etc could be serioursly challenged by an intellectually courageous business thinker that wouldn't mind going against a luminary (and investing the time and risking the reputation of challenging an Oracle.) Some of these challenges are not that difficult, and the internal logic that Buffett uses in some instances is flawed (and simply demonstrably so.) This is not the place to expound on it, but one of the pleasures of reading this compilation, is the excercise of mentally challenging Buffett.
On the matter of style, one can say that part of what makes Buffett's business reports memorable is his hokey style where he parenthetically inserts (often times bad or crude) jokes and aphorisms. But I was surprised by the predominance of mating references (quite often so irrelevant and unnecessary that they seemed forced into the essay). If this phenomenon is not simply the selection preference of the editor, but Buffett's actual thought frequency, it would be interesting to see a psychological profile of the man in light of his personal biography (he as much says in one of the essays that to a guy sitting on $130 million, an older woman should hold no attraction.)
As a last thought on the matter of style, just like I distrust a politician that tells me he is just a regular Joe, I distrust a highly sophisticated investor, that operates complex businesses and manages intricate transactions, and speaks of it all in home-spun, dumbed-down, folksy speech. For all his diatribes against derivatives, he uses them frequently (and profitably), for his disdain of junk-bonds, he "invests" in them, for his "aversion" to speculation he has made a lot of money speculating in silver, in foreign currency, in default swaps, etc. And for all his high-horse-ridding about accounting transparency and operational honesty, he is rather silent on his essays about the alledged improper insurance transactions his company was involved with in his dealings with AIG, but more troublesome is his "throwing under the bus" of his insurance executives (several of them convicted), by claiming himself too far removed from the operations to know about those transactions: Either a lie, or a deriliction of duty (to use his own phrase).

[[ASIN:0966446127 The Essays of Warren Buffett: Lessons for Corporate America, Second Edition]]made its debut at BRK 2008 annual meeting. It is a definitive and clear source on Buffett's views, and an excellent summary/interpretation of his letters to the shareholders. I believe this is the best work on Buffett written to date (I read all of them). If you want to read only one book on Buffett, this should be it. It is also Buffett's favorite book about himself.

Why buy the 2nd addition instead of, or in addition to the first? Invaluable new additions (among the new gems are sections on audit committees, Buffett's views on debt, and mergers) make this book ever more pertinent to the current corporate environment and today's investment practices. This is a must-read.

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.

This is the first investment book I have read for pleasure, and I wish it had been required reading in one of my college Finance or Accounting classes. It certainly helps if one gets (at a basic level) the technical terms and is familiar with most of the economic and political circumstances that Mr. Buffett references, but I am confident one would enjoy the book even if he or she didn't. Here is the key - you won't find a more humble, thoughtful and honest business manager than Mr. Buffett. He understands human behavior, the limits of an individual's abilities, the factors that motivate employees, managers, and owners, and the power of capital - both human and financial. These essays are pretty easy reads; the genius of Mr. Buffett is at least in part his ability to communicate complicated things in an understandable way. The subject matter is diverse - the ideal characteristics of a manager (particularly a CEO), investment tools, acquisitions, GAAP accounting treatments, and taxes - but all concepts are deftly woven together by Mr. Cunningham.

Inspiring and achievable philosophy for more than just investments - Mr. Buffett seems genuinely happy with his life, and I honestly believe it's because he enjoys what he does and who he is working with more than the billions in the bank he has.

Warren Buffett's annual letter to shareholders of Berkshire Hathaway is one of the most highly anticipated and widely read documents for those interested in business, investments, politics, and economics. Most shareholder letters are either boring documents that shed little light on the operations of a company or merely glossy cheerleading exercises that gloss over much that informed investors would want to know. In both content and appearance, Buffett's letters are anything but typical. You will not find glossy paper, self congratulatory photos, and other marketing material when reading a Berkshire Hathaway annual report.

Given the fact that Berkshire Hathaway has posted a listing of the past thirty shareholder letters, what would be the value in purchasing a compilation of these letters in the form of a book? When I first learned about Lawrence A. Cunningham's book, The Essays of Warren Buffett: Lessons for Corporate America, I had doubts about the value of reading it particularly since I had already read most of Buffett's letters to shareholders. I purchased the first edition in early 2000 shortly after becoming a Berkshire Hathaway shareholder and recently purchased Cunningham's 2nd edition.

I can say that this book is WELL WORTH purchasing. For a full review of this book, please click the following link:

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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!

I am not sure for which audience this book was written, but i cannot get any useful content out of it. The book seems extremely dragging, and completely out of touch. I've been trading stocks for a year now, and i am very hungry for knowledge and new information to become a better stock market investor, but i had to stop reading this book half way into it, I just felt i was completely wasting my time. If you are relatively new in trading stocks, i personally don't recommend this book.

I have both editions of this book. If you watch the CNBC special on Buffett, he comes right out and tells the viewers this is the best book you can purchase for what he does. Buffett will never write a book on investing. Why? He has already written it. It is his letters to share holders and The Intelligent Investors (1970s edition). It is basic Dale Carnegie and his way of giving back to those closest to him-the people that have put the ultimate trust in him, Berkshire Shareholders. He puts in right there for you. To better understand, read The Warren Buffett Way and The Warren Buffett Portfolio (two books Buffett and Munger recommend). Read Charlie Munger's Almanac, everything written by Ben Graham (first 4 editions, especially 1940s ed.) and ignore the rest.