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Warren Buffett's Ground Rules

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Warren Buffett's Ground Rules

Words of Wisdom from the Partnership Letters of the World's Greatest Investor

HarperBusiness,

15 min read
10 take-aways
Audio & text

What's inside?

Warren Buffett’s letters show that the basics of wise investing persist from decade to decade.

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Editorial Rating

8

Qualities

  • Analytical
  • Applicable
  • Background

Recommendation

For consistent success in volatile markets, it’s hard to beat Warren Buffett. Authors trying to unlock the Oracle of Omaha’s secrets have written shelves full of books. This compilation proves a welcome addition to the canon. Investment manager Jeremy C. Miller dives into Buffett’s correspondence from the 1960s. He finds that Buffett has followed the same common-sense principles for decades. The letters date back to when Buffett managed relatively small sums, so his strategies are more relevant to individual investors than his more recent moves are. Miller argues that Buffett’s investing strategy includes nothing flashy or complicated – his genius is in making sound investment decisions again and again. getAbstract recommends Miller’s analysis of Buffett’s early letters to investors looking for insight from one of the all-time greats.

Summary

The Early Days of the Master

Warren Buffett is a genius stock picker. His stellar track record predates the launch of his legendary holding company, Berkshire Hathaway. Buffett got his start investing on behalf of family and friends. In 1956, at age 25, he launched a fund as its general partner; his friends and relatives were limited partners. Backers included his aunt, father-in-law and college roommate. The investment rewarded them handsomely. Buffett Associates Ltd. consistently outperformed the market, delivering a 24% compounded annual return after fees.

In a few years, the assets in Buffett’s partnership soared from just $105,000 to more than $7 million. In a 1999 interview, Buffett recalled how easy it was to beat the Dow when he was running relatively small sums: “It’s a huge structural advantage not to have a lot of money.” Countless investors now look to Buffett as a role model. Retirement savers and market hobbyists can learn almost nothing from the huge plays he makes today at Berkshire Hathaway. Investments on that scale occupy a different universe than the smaller moves made by everyday investors. However, individual investors can glean...

About the Author

Jeremy C. Miller is an investment analyst for a mutual fund company and a 15-year veteran of the financial industry.

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