Annual Education Instalment

5 March 2005

The beauty of one lesson from Warren Buffett is that it keeps on giving. It makes you want to learn more, and he tells you how to go about that.

The 2004 annual report and letter to shareholders is different only in that it provides a greater incentive to dig deeper. Take these topics for instance: (Note: the first two are pdf files.)

  • Fuzzy Math and Stock Options
  • America’s Growing Trade Deficit is Selling the Nation Out from Under Us
  • What were the titles of the eighteen (recommended) books sold at last year’s annual meeting?
  • What are the three reasons most investors suffer results “ranging from mediocre to disastrous?”
  • What’s the second largest real estate broker in the country?
  • Why is a $20,000 hiring decision a $3 million business decision?
  • Why would Warren Buffett and Charlie Munger applaud a business manager who is reducing his sales volume?
  • The World Trade Center disaster cost the insurance industry an estimated $35 billion. What would happen if the insurance industry faced a $100 billion event? (Hint: “At bottom, any insurance policy is a promise, and as everyone knows, promises vary enormously in their quality.”)
  • “Like Hell, derivative trading is easy to enter but difficult to leave. (Other similarities come to mind as well.)”
  • Are women wearing more or less underwear these days?
  • What company leads the world in training pilots and who is their number one customer?
  • Why did Berkshire Hathaway own approximately $21.4 billion of foreign exchange contracts at the end of 2004?
  • How do the budget deficit and the current account deficit differ?
  • ”...lemmings as a class may be derided but never does an individual lemming get criticized.”
  • What should you read if you want to keep abreast of trade and currency matters?
  • “Self-interest inevitably blurs introspection.”
  • Options expensing is scheduled to become mandatory on June 15th. What should you expect between now and then?
  • What book has Warren Buffett asked to be added to this year’s list of annual meeting titles?

Stay tuned for some answers to these questions. In the meantime, please understand why any person participating in the business world today should pay any attention to this stuff:

“I do this in the spirit of the farmer who enters his hen house with an ostrich egg and admonishes the flock: ‘I don’t like to complain, girls, but this is just a small sample of what the competition is doing.’”

Now, get busy. It’s free. It’s fun. It’s enriching.

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