Quick thoughts : Warren Buffett Book

I recently completed the book 'The essays of Warren Buffett: Lessons for Corporate America' selected, arranged and introduced by Lawrence Cunningham. This is a compilation of carefully categorized thoughts shared by Buffett in his annual letters to Shareholders from 1979 to 2000. Straight from the heart and packed with lot of humor. So lots to observe and learn from the master.

What I learned at the end is the importance of selecting a business with excellent economics & efficient and honest management i.e. to buy a comfortable business at a comfortable price. If you understand and like the business and if you are happy dealing with the management, you may not have a strong reason to sell. Afterall, the master's favorite holding period is forever.

Buffett's thoughts on circle of competence, margin of safety, Accounting, reported financials, usefulness of options as managerial rewards, retained earnings, capital allocation, management control etc. are very useful and open a different perspective.

This does make me re-think about my core portfolio. If Buffett were to select stocks from Indian market, would he choose Yes Bank, NTPC, Reliance Industries, Infosys, MindTree & Petronet LNG? Honestly I don't know. I am still learning and understanding. While this is a never ending process, I hope to be in a better situation few months down the line when I would have completed my first level of investment education i.e. Reading classics on investment basics and valuations.

I hi-lighted many useful portions of the book and infact the pages now look more of fluorecent yellow. I wish I could have written more about what I understood...and may be sometime in future I will do this.

For now, here are some of the many many useful thoughts that I could quickly type out.

1. "....The primary relevant factors are the long-term economic characteristics of a business, the quality and integrity of its management, and future levels of taxation and inflation" Page 10
2. "Intelligent investing is not complex, though that is far from saying that it is easy" Page 94
3. "If the choice is between a questionable business at a comfortable price or a comfortable business at a questionable price, we much prefer the latter. What really gets our attention, however, is a comfortable business at a comfortable price" Page 95
4. "I have said many times that when a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact" Page 98
5. "Beware of past-performance 'proofs' in finance: If history books were key to riches, the Forbest 400 would consist of librarians" Page 105
6. "Promoters, after all, have throughout time exercised the same judgement and restraint in accepting money (capital) that alcoholics have exercised in accepting liquor" Page 113
7. "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful" Page 127
8. "If earnings have been unwisely retained, it is likely that managers, too, have been unwisely retained." Page 135
9. "Our goal is to give you important information in a form that we would wish to get it if our roles were reversed" Page 220