Warren Buffett's Ground Rules

Using the letters Warren Buffett wrote to his partners between 1956 and 1970, a veteran financial advisor presents the renowned investor’s “ground rules” for investing—guidelines that remain startlingly relevant today. In the fourteen years between his time in New York with value-investing guru Benjamin Graham and his start as chairman of Berkshire Hathaway, Warren Buffett managed Buffett Partnership Limited, his first professional investing venture. Over the course of that time—a period in which he experienced an unprecedented record of success—Buffett wrote regular letters to his small but growing group of partners, sharing his thoughts, approaches, and reflections. Compiled for the first time, and with Buffett’s permission, the letters spotlight his contrarian diversification strategy, his almost religious celebration of compounding interest, his preference for conservative rather than conventional decision-making, and his goals and tactics for bettering market results by at least 10 percent annually. Demonstrating Buffett’s intellectual rigor, they provide a framework for the craft of investing that had not existed before: Buffett built upon the quantitative contributions made by his famous teacher, Graham, revealing how these wisdoms could be applied and improved. With additional context, synthesis, and insights provided by Jeremy C. Miller, Warren Buffett’s Ground Rules gives us a firsthand look into Buffett’s mind and provides accessible lessons in control and discipline—effective in bull and bear markets alike, and in all types of investing climates—that are the bedrock of his success. Warren Buffett’s Ground Rules paints a rare portrait of the sage as a young investor during a time when he developed the long-term, value-oriented strategies that helped him build the foundation of his wealth—rules for success every investor needs today.Taken together, the letters provide a solid foundation for building financial success. Advance Praise for Warren Buffett’s Ground Rules “Mr. Miller has done a superb job of researching and dissecting the operation of Buffett Partnership Ltd., and of explaining how Berkshire’s culture has evolved from its BPL origin. If you are fascinated by investment theory and practice, you will enjoy this book.”—Warren Buffett “This book is much more than a compilation of excerpts from Buffett’s letters, smartly organized by investment theme. Miller begins every chapter with an articulate and insightful synthesis, which helps the reader understand Buffett’s key ground rules on each theme.”—Robert Pozen, senior lecturer at MIT Sloan School of Management, former chairman of MFS Investment Management “Warren Buffett’s Ground Rules is an extraordinarily useful book for anyone who is interested in investing, or in Warren Buffett. Jeremy C. Miller has done a careful study of Buffett’s early partnership letters and turned them into an easily accessible body of knowledge. In doing so, he has written an indispensable book. For my part, I will keep it close at hand for easy reference in the years to come.” —Guy Spier, author of The Education of a Value Investor “Warren Buffett’s Ground Rules is a wonderful collection of Buffett’s early partnership letters and musings organized in a thoughtful, concise, and entertaining format. Together with Miller’s commentary, the book offers valuable insight into the world of value investing.”—Christopher Blake, managing director of Lazard Asset Management