I recently ordered Tap Dancing to Work, a collection of articles on (and sometimes by) Warren Buffett that had appeared in Fortune magazine over the years. Unfortunately, I found the book somewhat disappointing because I had already read the better bits over the years (most of it is already available online) and the bits that I had missed (usually the older articles) were hardly interesting. A further quibble is that some of Mr. Buffett’s work that were published elsewhere are not included in the book.

If you have an hour or so and are interested in reading some of Mr. Buffett’s works check out the following articles available online. And prepare to be amazed by a guy who has made some astonishingly prescient market calls despite claiming to have no idea where the markets are headed short-term.

Buffett: How inflation swindles the equity investor

By Warren Buffett, Published May 1977 in Fortune Magazine

For many years, the conventional wisdom insisted that stocks were a hedge against inflation. The proposition was rooted in the fact that stocks are not claims against dollars, as bonds are, but represent ownership of companies with productive facilities. These, investors believed, would retain their value in real terms, let the politicians print money as they might.

And why didn’t it turn out that way? The main reason, I believe, is that stocks, in economic substance, are really very similar to bonds.

The Superinvestors of Graham-and-Doddsville

By Warren Buffett, Published 1984 in Hermes, Columbia Business School Magazine

I’m convinced that there is much inefficiency in the market. These Graham-and-Doddsville investors have successfully exploited gaps between price and value. When the price of a stock can be influenced by a “herd” on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical.

Mr. Buffett on the Stock Market

By Warren Buffett, Carol Loomis, Published November 1999 in Fortune Magazine.

I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like–anything like–they’ve performed in the past 17. If I had to pick the most probable return, from appreciation and dividends combined, that investors in aggregate–repeat, aggregate–would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%. If you strip out the inflation component from this nominal return (which you would need to do however inflation fluctuates), that’s 4% in real terms. And if 4% is wrong, I believe that the percentage is just as likely to be less as more.

Warren Buffett On The Stock Market

By Warren Buffett, Carol Loomis, Published December 2001 in Fortune Magazine.

Even so, that is a good-sized drop from when I was talking about the market in 1999. I ventured then that the American public should expect equity returns over the next decade or two (with dividends included and 2% inflation assumed) of perhaps 7%. That was a gross figure, not counting frictional costs, such as commissions and fees. Net, I thought returns might be 6%.

Today stock market “hamburgers,” so to speak, are cheaper. The country’s economy has grown and stocks are lower, which means that investors are getting more for their money. I would expect now to see long-term returns run somewhat higher, in the neighborhood of 7% after costs. Not bad at all–that is, unless you’re still deriving your expectations from the 1990s.

Buy American. I Am.

By Warren Buffett, Published October 2008 in The New York Times

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Buffett’s Big Bet

By Carol Loomis, Published November 2009 in Fortune Magazine.

Will a collection of hedge funds, carefully selected by experts, return more to investors over the next 10 years than the S&P 500?

That question is now the subject of a bet between Warren Buffett, the CEO of Berkshire Hathaway, and Protégé Partners LLC, a New York City money management firm that runs funds of hedge funds – in other words, a firm whose existence rests on its ability to put its clients’ money into the best hedge funds and keep it out of the underperformers.

Why stocks beat gold and bonds

By Warren Buffett, Published February 2012 in Fortune Magazine.

My own preference — and you knew this was coming — is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola (KO), IBM (IBM), and our own See’s Candy meet that double-barreled test. Certain other companies — think of our regulated utilities, for example — fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets.

And last but not least, Buffett’s Letters to Shareholders usually contains a nugget or two of investment wisdom.

Buffett Partnership Ltd. Letters, 1959 to 1975.

Berkshire Hathaway Inc. Shareholder Letters, 1977 to 2011.

This article has 5 comments

  1. Thanks for sharing this list, Ram.

    Perhaps your readers will find this series that I wrote on Buffett useful. It was during the 2011 Berkshire Hathaway annual general meeting. It includes a live blog replay and three articles, with a Canadian perspective.

    Link: http://www.moneylifeskills.com/articles–interviews.html (scroll to “Insights from Warren Buffett”).

    Neil

  2. I am most surprised from reading the articles that he may just be a hockey fan. LOL

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  5. Here are some interesting quotes from Warren Buffett

    IF WE CAN’T FIND THINGS WITHIN OUR CIRCLE OF COMPETENCE, WE DON’T EXPAND THE CIRCLE. WE’LL WAIT.

    Translation: This is another one of the statements that proves Warren Buffett is a genius, perhaps without equal. Buffett took the idea of the Circle of Competence directly from Benjamin Graham who was Buffett’s mentor and finance professor while Buffett was a student at Columbia University. Graham always talked about doing what only what you know. If you are good at something, that’s what you do, that’s what you become the expert at.

    Why would a brilliant research doctor who probably knows more about drug creation than 99% of the people on earth go and buy software companies in his own portfolio. Companies that he knows basically nothing about. You stick to what you know. That’s where the money is.

    Warren Buffett would demand that you buy only what you know about. If the companies that you know about are not available at the right price now, just don’t invest right now. Buffett would tell you that you do not have to be constantly invested.

    You must Invest only in what you understand thoroughly, and the emphasis is on YOU. Warren Buffett and you the investor should never go outside your Circle of Competence. You might remember in the late 1990’s, there was a period when just about every investor was trading in the world of the Internet stocks. For a period of a year they were going straight up. Would you believe that Buffett never invested in one Internet stock during the entire cycle. He was one of the few big investors not to get taken in. Learn from the Master. Meanwhile in Texas the Bass Brothers who made billions in the stock market, were insisting that their investment advisors allocate funds into the Internet stocks. The Basses during this period lost several billion dollars.

    NO MATTER HOW GREAT THE TALENT OR EFFORTS, SOME THINGS JUST TAKE TIME. YOU CAN’T PRODUCE A BABY IN ONE MONTH BY GETTING NINE WOMEN PREGNANT.

    Translation: Buffett is the master of compounding. It’s probably hardwired into his brain. In this quote he is talking about compounding, and the time it takes for compounding to KICK IN. This is a vital point that most investors never pick up on. Investors are always looking for stocks that are going to double in a year or two years – that’s why they want tips. Instead, they should be looking for stocks that are going to go up a more reasonable amount, such as 20% or 25% a year for the next 20 years. That’s where the fortunes are made.

    Decades ago, Warren Buffett invested only a couple million dollars in the Washington Post newspaper. That couple of million dollars became worth a billion dollars over a period of several years. Buffett always believed that you can’t produce big results in months, or even a couple of years. If however, you buy at the right price, and the right stock, you will make a fortune in time. You need COMPOUNDING to do achieve these kinds of returns.

    IF CALCULAS OR ALGEBRA WERE REQUIRED TO BE A GREAT INVESTOR, I’D HAVE TO GO BACK TO DELIVERING NEWSPAPERS.

    Translation: We have seen detailed financial projections based on estimates carried to the third decimal place. Investments based on such projections aren’t worth the paper they are printed on. They are ludicrous as well. Sir John Templeton was the finest mutual fund manager of the 20th century, (Peter Lynch is his superb rival) once told me that investments are mostly common sense.

    It would seem that many investors want to make more out of an investment than common sense. They want to use the most advanced formulas, or mathematical models that simply don’t stand up to the test of time. Warren Buffett would tell you that simple mathematics is what you need, and a logical brain that can withstand the emotions, because emotions can get in the way of investing.

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