The Essays of Warren Buffett: Lessons for Corporate America

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He's scathing about short term speculation, complex financial instruments, short term thinking, responding to mood. His comments about buying cheaply are sharp. Something may well be cheap for a reason- and trying to make it better will likely be a losing struggle. If something is unintelligible it's probably concealing a lie, and an untrustworthy person behind it. If a manager is promising that they will make the numbers, sooner or later they will be tempted up the numbers. We live in a short term appearance world and pathologies such as probophilia (as described in Between Health and Illness: Explorations in and around medicine afflict too many institutions. This is the Third Edition of an ongoing process by which Warren Buffett presents a “chairman’s letter” (i.e. progress report with his unique reflections) to Berkshire Hathaway shareholders at their annual meeting. Lawrence A. Cunningham edited each of the three editions, with the latest including Buffett’s annual letters to Berkshire shareholders since 2008, the date of the prior edition. Other new material includes: o They are yearly “state of our company” updates provided by Warren Buffett at annual meetings of Berkshire Hathaway shareholders Under this leadership style, employees who are skilled and motivated can thrive, but those who aren’t are more likely to fail and miss deadlines. Buffett hires staff that are highly driven and skilled in this case because he is relying on the output. The outside board members should establish standards for the CEO's performance and should also periodically meet, without his being present, to evaluate

According to Buffett, the best book collating his philosophy is The Essays of Warren Buffett by Lawrence A. Cunningham, the internationally renowned scholar and expert on Buffett and Berkshire. Through many updated editions dating to 1997, The Essays is the definitive account of Buffett's approach to investing and management, consisting of a carefully curated and thematically organized compendium of Buffett's original annual letters, along with Cunningham's priceless commentaries. To suggest that this investor should sell off portions of his most successful investments simply because they have come to dominate his portfolio is akin to sug- gesting that the Bulls trade Michael Jordan because he has become so important to the team."Buffett’s management style is known as laissez-faire, or “delegate leadership,” and it is known to result in lesser output but higher other resources for individuals and teams. These essays should be compulsory reading for company directors, and CEOs who prefer to cook the books rather than produce tangible profits. They would learn something from Buffet and Charlie Munger's integrity, and corporate America would be the better for it. There are various characteristics that accurately depict Warren Buffet’s actual leadership. The following is a list of these: Somehow Lawrence achieves both convergence and coherence with several dozen of Buffett’s essays, written within a 35-year timeframe (1979-2014). The material does indeed read as “a complete and coherent narrative of a sound business and investment philosophy.” The eleven sections range from Corporate Governance to Berkshire at Fifty and Beyond. Over the years, I have accumulated more than one hundred Warren Buffett quotations and have selected these as indicative of the thrust and flavor of his perspectives. Pg 177-178: restricted earnings are seldom valueless to owners but they must be discounted heavily: for every dollar retained by corporations at least one dollar of market value will be created for owners if the capital retained produces incremental earnings equal to or above those generally available to investors.

As I’ve said in these memos for the last 25 years “We can afford to lose money - even a lot of money. But we cannot afford to lose reputation - even a shred of reputation” According to Cunningham, “Those who are familiar with The Essays will notice that we have made the cover snappier than has been our custom. (Thanks for the cover design to Tim Colton, of Carolina Academic Press, which will continue to partner with me in the distribution of the book.) The main reason: the book’s traditional covers could be seen well in physical form but pictures of them, shown on the internet, could not. Since most sales are done over the Internet these days, the cover needed a face-lift. The first section, on investing, includes some of Buffett’s most famous essays, such as “ The Superinvestors of Graham-and-Doddsville” and “How Inflation Swindles the Equity Investor” In these essays, Buffett lays out his investment philosophy and discusses the principles that have guided his successful investing career.Based on his personality traits and attitude toward his employees, Warren Buffett’s leadership style is classified as transformative leadership. A transformational leader has a powerful leadership style. This type of leader is always in the company of his or her subordinates. They motivate and entice employees to call. He even congratulates and soothes his coworkers on their successes and failures. Warren Buffett’s personality is made up of all of these characteristics. Warren Buffett is a thinker and a motivator who encourages his employees to succeed in their respective industries. Well, you should follow the same advice – only invest in bonds if it’s for the short-term. Personally, I invest in a high-yield savings account for my emergency fund but bonds can work well, especially if you use a bond ladder. The only issue is that it’s not as liquid as a savings account, so it’s a bit of risk vs. reward. With regard to other sources, I also highly recommend these: Alice Schroeder’s The Snowball: Warren Buffett and the Business of Life, Roger Lowenstein’s Buffett: The Making of an American Capitalist, and Tren Griffin’s Charlie Munger: The Complete Investor. Thinks a Long Way Ahead of Time: A capable leader should be able to see into the future. In this light, he should be able to assess the results of his business and effort. Berkshire Hathaway has always been a forerunner in terms of investing. Warren Buffett’s foresight is to thank for this. Some other material has been rearranged to deepen the themes and lessons that the collection has always produced: