Acknowledgments ix Introduction xi Chapter 1 Shareholders as Partners 1 "Although our form is corporate, our attitude is partnership." Chapter 2 Corporate Culture 5 "It takes 20 years to build a reputation and fi ve minutes to ruin it. If you think about that, you'll do things differently." Chapter 3 Corporate Governance 15 "At Berkshire, board members travel the same road as shareholders." Chapter 4 Berkshire Managers 29 "They love their businesses, they think like owners, and they exude integrity and ability." Chapter 5 Communication 33 "As managers, Charlie and I want to give to our owners the financial information and commentary we would wish to receive if our positions were reversed." Chapter 6 Acquisition of Nebraska Furniture Mart 43 "We gave Mrs. B a check for $55 million and she gave us her word. That made for an even exchange." Chapter 7 Acquisition of GEICO 51 "The security I like best" Chapter 8 Acquisition of General Reinsurance 57 "Long ago, Mark Twain said: 'A man who tries to carry a cat home by its tail will learn a lesson that can be learned in no other way.' If Twain were around now, he might try winding up a derivatives business. After a few days, he would opt for cats." Chapter 9 The Assessment and Management of Risk 71 "Don't think, however, that we have lost our appetite for risk. We remain prepared to lose $6 billion in a single event, if we have been paid appropriately for assuming that risk." Chapter 10 Executive Compensation 77 "At Berkshire . . . I am a one man compensation committee who determines the salaries for the CEOs of around 40 significant operating businesses. How much time does this aspect of my job take? Virtually none. How many CEOs have voluntarily left us for other jobs in our 42-year history? Precisely none." Chapter 11 Time Management 83 "When my mother got to be eighty the most important thing in how long you live is how long your parents live. I got her an exercise bike, put her on a strict diet, and she's just piling up the years for me." Chapter 12 How to Manage a Crisis 87 ". . . I will attempt to do it in the manner of a fellow that has never met a lawyer." Chapter 13 Management Principles and Practices 99 "Simple, old and few." Chapter 14 Executive Behavior 131 "Many CEOs attain their positions because they possess an abundance of animal spirits and egos. . . . When such a CEO is encouraged by his advisors to make deals, he responds such as would a teenage boy who is encouraged by his father to have a normal sex life. It's not a push he needs." Chapter 15 Mistakes I've Made 141 "I can look back on every year in terms of mistakes I've made. The dumbest mistake I ever made was, will probably be in the future." Chapter 16 Personal Investing 151 "Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be higher fi ve, ten, and fi fteen years from now." Chapter 17 Buffett, the Teacher 165 "If I talk to 50?60 year olds, basically they want to be entertained by my predictions and if I talk to 20 year olds or even 25 year olds, they ask me the questions on their minds. . . . The idea is that they listen and you may change some lives." Chapter 18 Humor and Stories 175 "In the words of the prophet Mae West: too much of a good thing is wonderful." Appendix A Warren E. Buffett, A Chronological History 181 Appendix B Berkshire Hathaway Inc., An Owner's Manual, Owner-Related Business Principles, January 1999 189 Appendix C Berkshire Hathaway Inc., Code of Business Conduct and Ethics 201 Appendix D July 23, 2008, Memo to Berkshire Hathaway Managers 209 Appendix E Berkshire Hathaway Inc., Corporate Governance Guidelines, as Amended on February 27, 2006 213 Appendix F Intrinsic Value 219 Appendix G The Superinvestors of Graham-and-Doddsville 223 Appendix H Berkshire's Corporate Performance versus the S&P 500 237 Appendix I Berkshire Hathaway Common Stock?Year-End Stock Prices 241 Notes 243 About the Author 259
Richard J. Connors is a Registered Investment Advisor and owner of Connors Investment Management Company in St. Louis, Missouri. Beginning in 2006, he has presented a class on Warren Buffett at the Washington University in St. Louis Lifelong Learning Institute. He is a graduate of the University of Notre Dame Business School and the St. Louis University School of Law.