This book is an educative book on lessons extracted from Mr. Warren Buffet's Letters to shareholders. The lessons cover topics on Investment(stocks), Business and company structure. These lessons are advice that Buffet gives on the particular topics.
Genre: BUSINESS & ECONOMICS / Investments & Securities / GeneralBooks sells 30 copies on ibooks since published it may 2015.
“Investment is most intelligent when it is most businesslike” Benjamin Graham.
Mr. Buffet defines investing: as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power (after taxes have been paid on nominal gains) in the future. Hence investing is forgoing consumption now in order to have the ability to consume more at a later date.
As an investor they are basic fundaments of investing, Warren lays down in his letters:
a) You don’t need to an expert in order to achieve great or satisfactory investment returns. Nevertheless you must know your limitations as an investor and keep things as simple as possible.
b) Focus on the future productivity of the asset you are considering to buy not price. Hence make sure you can make a rough estimate of the asset's future earnings. If you are not able to estimate the future earnings of the asset don’t make the investment. Advice: No human being has the ability to evaluate every investment possibility.
c) Don’t rely on speculation to buy an asset, hence your focus should be on the productive of the asset not price valuations. To illustrate the above points, Warren in his letter of 2013. He tells about the investments he made in 1986 and 1993. In 1986 he purchased a 400 acre farm, in Omaha at $ 280,000. He knew nothing about operating the farm, but his son did. So he was able to make an estimate of future earning or a return of 10% from the farm. He also thought that the productivity of the farm would move higher, 28years later the farm has tripled its earnings and its worth five times it’s originally value. He concludes this point stating that: what the economy, interest rates, stock market might do in years following 87 and 94, was not a FACTOR on him making
