Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor, 2nd Edition

Acknowledgments xiii

Introduction 1

ABOUT LIFE 13

Omaha? Omawhere? Omawhat? 13

Live how you want to live 15

Eat what you want to eat 15

Have a hobby 16

Be passionate 19

Aim high 20

Aim well 23

Focus on your goals 23

Keep life in perspective 23

Be honest 27

Tell the whole truth, please 28

Letter to the Wall Street Journal 30

Cultivate good character 36

Believe in yourself 37

But don’t get too stuck on yourself 38

Dodge the hype 44

Share your wisdom 44

Disregard old age 45

ALSO: Attention Investors: Warren Buffett is crossing the street 20

Nice guys finish first—sometimes 24

Choose your heroes well 40

Rose Blumkin, matriarch of the Nebraska Furniture Mart 47

ABOUT FRIENDS 51

Know what friendship is 51

Go to bat for your pals 51

Guiding Governor Schwarzenegger 52

Build lifelong friendships 54

ALSO: Charlie Munger 54

ABOUT FAMILY 58

Don’t spoil your kids 58

The Buffett children 62

Work things out with your wife 75

Be kind to your mother 81

ALSO: What others say about Warren Buffett 70

Astrid Menks, Buffett’s second wife 78

The controversial Susan T. Buffett Foundation 79

What Leila Buffett had to say about her son 82

What the critics say 82

ABOUT WORK 85

Work for the fun of it 85

Start early 88

Work where you want to work 89

Work with good people 90

Give a pat on the back 92

Be loyal to your partners 93

Guard your time 95

Know when to quit 97

ABOUT RUNNING A BUSINESS 99

Communicate well 99

Know when to say no 100

Set an example 101

Take care of shareholders 104

Hire well, manage little 110

Put a premium on experience 111

Be smart about allocating capital 111

Be brave 112

Use crossover skills 112

The mighty machine called Berkshire Hathaway 113

ALSO: The Berkshire Hathaway annual meeting 102

Goodbye to a good idea 106

The Salomon scandal 108

Berkshire Hathaway online 109

ABOUT INVESTING 116

Have a philosophy 116

Recognize the enemy: inflation 117

Experience epiphany 119

Never mind what the professors say 125

Meet Mr. Market—your servant, not your guide 126

Ignore Mr. Market’s moods 129

Listen for opportunity’s call 130

Know the difference between price and value 133

Seek intrinsic value 133

Expect to be out of step 134

Earnings, earnings, earnings 137

Look forward, not back 138

Avoid risk 139

Don’t gamble 141

Watch for unusual circumstances 143

Don’t be surprised by circumstances 143

Avoid excessive debt 144

Look for screaming bargains 145

Arbitrage when possible 145

Be patient 148

Think for yourself 149

Have the right tools 150

Be wary of Wall Street 151

Only buy securities that you understand 152

An old dog prowls new markets 153

PetroChina 155

An expanding circle of competence 157

Buy reading glasses 160

Become an investigative reporter 161

Keep it simple 162

Think big 164

Know what you’re looking for 166

Don’t sweat the math 167

Admire frugality 169

Set realistic goals 171

Face facts 171

Expect change 174

Be capable of change 175

Admit your mistakes 182

No thumb sucking 185

Join AA (Airlines Anonymous) 186

Learn from your mistakes 190

Buy storybook stocks 191

Seek excellent companies 193

Stick with quality 196

Junk bonds 197

Appreciate franchise value 199

Respect pricing power 202

Find a company with cheap float (then try to not misplace the company) 203

Learn to like Monopoly 204

Find managers who think like owners 205

Management is important, but a good company is more important 206

Avoid the Institutional Imperative (the tendency for corporations to act like lemmings) 206

Favor companies that repurchase their own stock 207

Don’t worry about diversification 207

Invest for the long term 208

To sum up 209

And when you’ve become wealthy by following in the footsteps of Buffett, pay your dues to society 210

Investing is one way of contributing to the public well-being 210

When rewards are disproportionate 211

Pay your taxes and don’t complain 214

Give as generously as you receive 218

Thoughts on charitable giving 223

Will Buffett’s gift affect the company? 226

The last word 227

ALSO: Benjamin Graham 120

The Used-Cigar-Butt School of Investing 135

He tells them, but they don’t listen 172

Baby Berkshire shares 175

What does the Bill and Melinda Gates Foundation do? 224

Berkshire’s Book Value vs. the S&P 500 231

Berkshire Hathaway Share Price 233

Time Line 235

Endnotes 241

Permissions 271