Book Summary: Of Permanent Value by Andrew Kilpatrick

22 May 2018

 

 

 


In this summary, you will learn

  • How Buffet developed a fascination with finance as a child;

  • Why Buffet keeps his investment cards close to his chest; and

  • Why Buffet appears more interested in making money than spending it.

 

Take-Aways

  • Warren Buffett grew up in Omaha, Nebraska, where he lives and runs his business today. He bought his first share of stock at the age of 11.

  • He was a math prodigy and has been fascinated by finance since early childhood.

  • He got his master’s degree from Columbia University, where he studied with Ben Graham, "the father of value investing."

  • He learned to keep his investment plans secret.

  • He learned to ignore conventional wisdom and still does so.

  • In 1956, at 25, he formed the Buffett Partnership with seven other investors who contributed $105,000. He made all the decisions.

  • By 1969, the partnership’s assets had grown to more than $104 million.

  • Buffett is now one of the richest men in the world.

  • In 1969, Buffett dissolved the partnership and began investing under the umbrella of his company, Berkshire Hathaway.

  • Berkshire has never had a year in which it lost money.

 

Summary

 

 

He learned a critical lesson: Do not be guided by what other people say and don’t tell your fellow investors what you are doing at the time you do it.

 

 

The Buffett Partnership

 

By 1963, Buffett had more than 90 limited partners. In 1964, he engaged the partnership in three main investment categories:

  1. Generals: Undervalued stocks that would be held for a long time.

  2. Workouts: Securities with a timetable and an arbitrage situation arising from sell-outs, mergers, reorganizations and the like.

  3. Controls: Firms in which the partnership owned such a large block of stock that the partnership gained control of the business.

“There is rarely any pomposity or moodiness in this multi-billionaire. People who have known him for years say they have never seen him angry. His response to things isn’t anger, but rationality.”

 

Berkshire Hathaway

 

 “He responds to the world by examining it thoroughly and in a positive and witty way. Those who have worked with him describe him as almost unfailingly upbeat and supportive, practically never testy. He works hard. And yet he says his work is not work, but fun. Fun to Buffett is studying the world of business through voracious reading.”

 

 

Buffett himself has said, "There’s nothing material I want very much." He loves making the money. Spending it is of little interest to him.  

 

Buffett continues to learn. The reasons for his success are his common sense, his own genius, and his life-long intense study of his area of greatest interest - business.

 

Gates has said that Buffett is his favorite CEO, adding, "The guy thinks. I love people who just think. The conventional wisdom, they don’t fall into it."  

 

 

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