Warren Buffett WealthPrinciples and Practical Methods Used by the
Worlds Greatest Investor
Robert P. Miles
John Wiley & Sons, Inc.
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Innodata0471656747.jpg
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Warren Buffett WealthPrinciples and Practical Methods Used by the
Worlds Greatest Investor
Robert P. Miles
John Wiley & Sons, Inc.
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Copyright 2004 by Robert P. Miles. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted inany form or by any means, electronic, mechanical, photocopying, recording, scanning, orotherwise, except as permitted under Section 107 or 108 of the 1976 United States CopyrightAct, without either the prior written permission of the Publisher, or authorization throughpayment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the web at
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Library of Congress Cataloging-in-Publication Data
Miles, Robert P.Warren Buffett wealth : principles and practical methods used by the
worlds greatest investor / Robert P. Miles.p. cm.
Includes indexISBN 0-471-46511-9 (CLOTH)1. Investments. 2. Buffett, Warren. I. Title.
HG4521 .M4567 2004332.6dc22
2003022243Printed in the United States of America10 9 8 7 6 5 4 3 2 1
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www.copyright.com. Requests to the Publisher for permission should be addressed to the
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In loving memory to my heroes
Timothy John MilesLeo McCrossinRoss Steggles
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Contents
Acknowledgments vii
Introduction xi
Chapter 1 Study the Best to Be the Best 1
Chapter 2 The Making of a Billionaire: A Timeline ofWarren Buffetts Wealth-Building Lifetime 23
Chapter 3 What Kind of Investor Are You? 43
Chapter 4 Developing an Investment Philosophy 69
Chapter 5 Know What You Own 85
Chapter 6 Invest in Main Street, Not Wall Street 103
Chapter 7 Buy to Keep, and Buy a Lot of a Few 123
Chapter 8 How You Can Learn from BuffettsInvestment Mistakes 141
Chapter 9 Common Myths about Investing, Wealth, and Buffett 163
Chapter 10 Five Investment Principles from the NextWarren Buffett 179
Chapter 11 Warren Buffetts Lessons on Having a Rich Life 191
Chapter 12 The Journey of a Lifetime 213
Appendix The Superinvestors of Graham-and-Doddsville 225
v
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Recommended Reading 243
Index 245
About the Author 251
vi Contents
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Acknowledgments
Although the skills used to write are different than those used in presenta-tions, written and oral forms of communication have both shaped the con-tent of this book. Therefore I am most grateful to the hundreds ofassociations, service clubs, student groups, nonprofit organizations, book-stores, book clubs, investment clubs, local and international chamber ofcommerce groups, investment conferences, wealth workshops, universities,and private and public corporations that have invited me to discuss War-ren Buffett and Berkshire Hathaway.
Dottie Walters, Felicia Ferrara, Dave Bell, Karen Post, Robyn Win-ters, and many members of the National Speakers Association have helpedmake me a better presenter. This book should wrightfully be dedicated toJanet Wright. She suggested that I send my Buffett CEO audio CDrecorded live before fifty-seven Canadian CEOsto Nightingale Conant,the worlds largest producer and distributor of audio programs. Dan Strutzel,new product development manager at Nightingale, had just completed amarket research poll, and listeners were asking for an audio program aboutWarren Buffett. This connection led to my recording a six-hour, twelve-session audio series titled How to Build Wealth Like Warren Buffett: Principlesand Practical Methods Used by the Worlds Greatest Investor.
If you enjoy this book, an outgrowth of the audio program, full creditbelongs to Janet. If you dont take away at least one new idea about wealthor investing using similar principles as Warren Buffett, then the blame be-longs to me. Either way I am grateful to Janet and all of her wonderful sup-port, enthusiasm, and encouragement throughout the book creationprocess.
I was thrilled to be invited to deliver a half-day Buffett Wealth work-shop in Australia suggested by Susie Christie and her assistant Donna Bun-nell of the Global Speakers Bureau based in Sydney, Australia. Many of the
vii
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graphs, charts, and tables used in this book were developed for my livespeeches in Sydney and Melbourne for the Wealth Workshop clients ofFreeman Fox. Their CEO Peter Spann, Australias foremost wealth educa-tor, and his seminar team led by Lisa Cadigan were a joy to meet.
In the United States, the Financial Forum Speakers Bureau based inLogan, Utah, and led by Lyn Fisher have been excellent representatives formy speaking engagements. Our friends to the north have invited me tospeak many times. Nicole Martel, CEO of Interlogic of Montreal, Canada,asked me to speak at her annual conference designed exclusively for CEOs.Geoffrey Carlton, Michael Lee-Chin, Jerry Santulli, Jeff Hull, SarahTucker, and Jessica McKnight from Berkshire Securities and AIC Funds inCanada have been very loyal clients.
Helping the message reach a third continent is Norman Rentrop.Along with his associates Andreas Hahne and Sandra Witscher, Normanhelped organize half- and full-day workshops in Bonn, Germany. Normansimultaneously translated my presentation into German for those Euro-peans unable to understand my English or me.
Im also grateful for the feedback and insights of Ross Brayton. Im in-debted to Professor Wendy Guo of the University of Nebraska at Omahafor inviting me to present to her students each year. Thanks to Gary Repair,executive producer and director from UNO TV, and his dedicated team forguiding me through the unique world of video program development anddistributionand to executive grip Michael Shearn and his friend JohnNewman (who only reads the acknowledgments: Hi, John!) for their opin-ions, support, and encouragement.
Thanks to Ralph Malloy, owner-manager of the 114th Street OmahaDairy Queen, for his assistance in helping me host the Berkshire Hathawaypreannual meeting reception and author fest. Jim Ross, manager of theOmaha airport Waterstones Booksellers, has made the DQ reception an ex-traordinary success and is a ready friend and valuable resource to every Buf-fett author.
For the past five years Berkshires wholly owned subsidiary Sees Candyhas kindly opened their Los Angeles manufacturing, packing, and shippingfacilities and offered a very unique tour each spring, on the morning beforeCharlie Mungers Wesco Financial annual meeting. Tour leader and long-time Sees CEO Chuck Huggins and his team, led by Customer Service Di-rector Dave Harvey, and the Sees associates at every level have made thisevent a sweet success.
viii Acknowledgments
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Helping launch the annual Graham Buffett Book Conference in LosAngeles are Roland Shank, the foremost Buffett-related book collector,and money managers and publishers Rich Rockwood and Adam Jones.
International investment managers Franois Rochon of Montreal,Canada, and Wayne Peters of Sydney, Australia, inspired and provided sev-eral charts in this book. I wish to thank Chris Wholeben and KristenFriend for their technical support, their Excel and PowerPoint expertise,and their chart creation talent.
Special thanks to The Motley Fool, Tom and David Gardner and Se-lena Maranjian, for creating a personal finance forum for all investors.
My gratitude goes to the fine folks at Berkshire Hathaway and relatedsubsidiaries: Warren Buffett, his assistant Debbie Bosanek, and CharlieMunger. To Robert Bird and Jeffery Jacobson of Wesco Financial; BillChild, R.C. Willey Home Furnishings; Harrold Melton, Acme Brick; Bar-nett Helzberg a
