Enterprising Investor Forum

The Tao of Warren Buffett, M. Buffet & D. Clark Wednesday, July 25, 2007

As most of you know, Mr. Buffett is regarded as the world’s greatest living investor. He has managed to do this by compounding his money at an average of approximately 28% per year since the beginning of the 50s. If you had invested 10,000 USD in Berkshire Hathaway in 1965 when Buffett bought it, you would have 35.6 million USD today!

How has he managed to do this? Well, his strategy revolves around the teachings of Benjamin Graham and the principles of ‘value’ investing. Buffett aims to buy shares at a significant discount to their underlying value and then holds them forever, unless the fundamentals change. Another differentiating factor is that he is not simply buying shares but he stresses the notion of ‘investing’ and acquiring ‘part ownership’ of businesses.

As Buffett puts it: “Our method is very simple. We just try to buy businesses with good-to-superb underlying economics run by honest and able people and buy them at sensible prices. That’s all I’m trying to do.”

What we love about Buffett is that his integrity and common sense have guided him throughout his whole life and allowed him to achieve truly extraordinary results without letting the money or fame ever get to him.

Anyway, we could go on for days praising Buffett… the purpose of this post is to review “The Tao of Warrant Buffet”. This book represent a collection of sayings from the man himself that basically offer the reader a unique insight on his overall approach to life and business.

To give you an idea what to expect:

• “You should invest in a business that even a fool can run, because someday a fool will.”

• “Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”

• “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

• “In looking for someone to hire, you look for three qualities: integrity, intelligence, and energy. But the most important is integrity because if they don’t have that, the other two qualities, intelligence and energy, are going to kill you.”

The book offers an easy read, great quotes and is an amazing source of insight & wisdom.

Enjoy!