The Essays of Warren Buffett: Lessons for Corporate America, written by Warren E. Buffett and Lawrence A. Cunningham, is a collection of Buffett’s personal annual letters to the shareholders of his various public companies, such as Berkshire Hathaway and the Buffalo News. The book itself is divided into four sections, each devoted to one of the major themes that Buffett covers in his famous annual letters: value investing, the market, corporate governance, and philanthropy. Through these letters and essays, Buffett has taught generations of investors, industry insiders, and corporate executives the same core values that he, himself, subscribes to.
First and foremost, Buffett is a value investor who looks for companies with strong businesses that have little to no debts, are reasonably priced and have good management teams who can create value in the long-term. Buffett has said that it is essential to analyze a company not just in terms of its stock price, but also to take into account its people, products and services, competitive position and future prospects. In short, Buffett believes in buying when there is ‘value’ to be found, not just when stocks increase in price due to momentum, speculation, or hype.
Another of Buffett’s core beliefs is that the stock market itself can be a risky, irrational place and investors should be wary of getting caught up in market manias. Buffett has had the foresight and knowledge to stay out of bubbles and to always have cash on hand in case potential opportunities arise when the market drops. His expectations when it comes to the stock market and other investments are always focused on the long-term and he often warns that investors should take great care not to become over-exposed to any one stock or sector.
In terms of corporate governance, Buffett’s approach to managing his companies is remarkably hands off. He is known for sticking to the basics and staying away from what he calls ‘noise.’ He has always avoided excessive management fees and salaries and puts stockholders’ interests at the forefront of his decision making process. When it comes to executive compensation, Buffett advises companies to keep pay packages in line with performance in order to reward and motivate employees.
Finally, Buffett’s philanthropic efforts demonstrate his belief in the power of giving back to society. He has been a major donor to charitable causes throughout his life, and in 2006 he pledged to donate 85 percent of his wealth to the Bill and Melinda Gates Foundation when he passed away. Buffett’s generosity goes beyond monetary donations, he often donates his time and talents to numerous causes he believes in, from supporting education reform to cleaning up the environment.
In The Essays of Warren Buffett: Lessons for Corporate America, Warren Buffett shares his time-tested methods for successful investing, corporate governance, and philanthropy. Each essay is written in Buffett’s distinct voice, highlighting his core values and principles. His focus on long-term investments, intense analysis of each company he considers, and generous spirit toward those around him, make his words essential reading for those wishing to learn from the master himself.
