The Master

This books gives a ringside view of Warren Buffet’s unprecedented financial acumen and wealth creation over five decades.

When Carol Loomis first mentioned a little-known Omaha hedge fund manager in a 1966 Fortune article, she didn’t dream that Warren Buffett would one day be considered the world’s greatest investor—nor that she and Buffett would quickly become close personal friends. As Buffet’s fortune and reputation grew over time, Loomis used her unique insight into Buffett’s thinking to chronicle his work for Fortune, writing and proposing scores of stories that tracked his many accomplishments – and also his occasional mistakes.

Loomis has collected and updated the best Buffett articles Fortune published between 1966 and 2012, including thirteen cover stories and a dozen pieces authored by Buffett himself. Loomis also provides commentary about each major article that supplies context and her own informed point of view. The book gives readers fresh insights into Buffett’s investment strategies and his thinking on management, philanthropy, public policy, and even parenting.

Nitty-gritty

Tap Dancing to Work describes the tremendous rise in the stock market and real growth in stock values over the years from 1966 to 2012. The Dow Jones Industrial Average grew by a factor of over 15 from 984 to 15,000 or more currently. Much of the book covers deeply held beliefs of Warren Buffet on investing and the financial markets.

Berkshire Hathaway stock grew from $22 a share to over $133,000 a share during that same period. Buffet believes that the greatest stock values can be achieved by companies whose stock values are misappraised by the markets. For example, Buffet is very proud of his achievements in helping to guide the Grinnell College Endowment Fund from a mere $8 million to $1.5 billion. Buffet explains that investors crave volatility because solid values can be purchased at dirt cheap prices.

Buffet has a healthy skepticism with regard to derivative transactions. He would require every CEO with significant derivative exposure to certify that every derivative holding is understood fully at the level of the CEO. Under this scenario, CEOs would be more careful with risk taking in favour of a more judicious approach.

Buffet likes big companies with large cash flow positions. One such company is American Express which has had an historical good cash position. The author likes to buy high quality assets in tight money markets. For instance, he bought huge amounts of Coca Cola after the 2008 crash. These stocks have risen substantially in value.

This is an excellent book on how to buy smart in order to acquire top assets cheaply while watching them grow to multiples of their original purchase price in recovering markets. This book will benefit a wide constituency of investors including those who are risk averse, as well as risk takers.


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