The best Buffet for your money

Mount Everest, K2 and Kangchenjunga are the 3 indisputable tallest mountain ranges out there. It is likely on the bucket list of many new and aspiring climbers, working as a backdrop siren call as they hone their skills on lesser mounds.

Book lovers have their own list but this list can never be definitive since there can be no universal consensus on what should go into “the toughest reads out there!” book list. Each person’s list, like the idea of utopia or hell, is personal and unique.

But odds are a 100 book list made by a lot of bibliophiles would likely contain gems like:
    Finnegans Wake by James Joyce
    Moby Dick by Herman Melville
    Simulacra and Simulation by Jean Baudrillard
    The Corrections by Jonathan Franzen
    Infinite Jest by David Foster Wallace

These books are reputed to be very tough slogs and there is no definitive guarantee you will turn the last page and feel glad you dived in. In fact, chances are most of these books will be flung across the room well before the last chapter. A lot of them are wilting in bookshelves around the world waiting for a day when the owner inevitably bundles it into the charity box for donation.

When I purchased ‘Berkshire Hathaway Letters to Shareholders‘ on 15 November 2013 (for the pricy sum of £2.07) I was not sure what I was in for. All I knew was that I liked Warren’s way of thinking, his approach to business and investing and I wanted to read more from the man directly, not via a biographer or hired hand. I surely would have done a double take if my future self had told me I would take 865 days to finish this thick fat almost 1000 page book.

 

L2S

‘Berkshire Hathaway Letters to Shareholders’ is not a book really but a collection of annual letters written by Warren Buffet, the legendary investor and 2nd richest man on Earth. Each year he writes a letter to his shareholders telling them how well (or poorly) Berkshire Hathaway, the company he runs, did. So technically this books, containing 50 letters, from 1965 to 2015, took 50 years to ‘write’. (Amazon automatically updated the kindle version with the letters of the last 2 years, after I purchased the book in 2013. Go Amazon!).

But then saying this book is a collection of annual letters written by Warren Buffett is akin to saying “History is about some important dates”. ‘Letters to Shareholders’ is soooo much much more than just a collection of letters. Through these 50 letters, Buffet talks about the wider investing and business world and touches on a lot of very interesting subjects, giving the reader a solid grounding on many helpful topics that can stand in as 24 Carat practical life lessons.

The book is especially splendid at educating the reader on 3 topics:

1. Investing: Over 50 letters (sermons?) Buffet elaborates on what being a value investor is all about and how to think like a smart value investor. There are books explicitly dedicated to teaching you investing and they fail at it while this £2 book does in effortlessly. Warren talks at length on how to think about investing and then how to act on that thinking. This alone makes this book worth the time needed to read it. I envy the young reader who finishes it before his 25th birthday. He is guaranteed to have a literally richer life than he would otherwise have had, whatever his starting position was weath-wise. Warren’s 2005 letter has a write up on ‘How to minimize investment returns’. What a tour de force that particular one was. As was the 2013 section ‘Some thoughts on investing’.

2. Business: Berkshire Hathaway buys and oversees a boatload of companies and Buffet wades deep into what specific metrics matter when running and evaluating a firm and which are the dubious ones (it’s EBIDTA). There are many colleges around the world, esp. in third world countries , offering dubious 2 year+ MBA and Business Diplomas that fail to do what this one little book does by itself: Give the reader an unbeatable and thorough education in the basics of thinking like a CEO/Businessman.

3. Understanding the Insurance Industry : Berkshire Hathaway at its core is an Insurance firm and as a Consultant currently embedded at one such firm, I could not have hoped for a more comprehensive overview on how to look into and understand the industry and the myriad operators in it. Insurance plays a crucial part in economies globally and the book gives the reader lessons on how to evaluate the health of the industry and a firm in it. Nothing comes close.

So yes, while it took me the better part of 30 months to finish this book end to end, it was only because one should ingest this book slowly and gradually to let the lessons and Buffet’s wisdom sink in, like sand settling at the bottom of a lake. A beach read this book is most definitely not but you know what this book most definitely is : The best £2 I ever spent.

So go on, jump in and climb this Everest of a book . The view from the top is breathtaking.

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