Introduction of Tap Dancing to Work: Warren Buffett on Practically Everything by Carol J. Loomis
A book that made Buffett tap dance at the shareholder's meeting. A book that Bill Gates called on everyone to read word by word. A book of Buffett's proverbs comparable to "The Poor Charlie Collection".
When Buffett said he was going to authorize a biography, people in the investment community almost agreed that Carol Loomis, the editor of Buffett's letter to shareholders, was the right choice. This "golden partner" has worked together for up to 50 years. However, Loomis demanded that the book should still follow the old way. It was written by Buffett himself, and Loomis was in charge of editing. As a result, Buffett can only find someone else, and the book is "Snowball". Despite missing this opportunity for cooperation, Loomis is still being urged to write a book about Buffett, which is the origin of the book "Tap Dancing to Work".
The book format uses time as a clue, and uses Buffett’s nearly 100,000 autographs as the axis to systematically analyze the impact of inflation, interest rates, corporate profits, transaction costs, and other factors on stock investment, and clarify stocks, stock index futures, and finance. The pros and cons of derivatives, bonds, gold, and other investment products provide a complete framework for analyzing the entire stock market. Between these words that embody the essence of thought, there are several in-depth reports revealing the secret of Buffett's important investment events. The scandal-stricken American Express, the god-given Freddie Mac, the life-threatening Solomon, and the frantic long-term capital management... They serve as perfect practical examples for the interpretation of Buffett's investment philosophy.
Recognized by the global investment community to interpret Buffett's must-read. Microsoft founder Bill Gates, Gaoyi Assets Chairman Qiu Guolu, and Dongfang Harbor Chairman Dan Bin are highly recommended!
Investment thinking framework for sustainable profitability. A comprehensive collection of nearly 100,000 words of Warren Buffett’s handwritten manuscripts and more than 20 articles revealing the inside story of the milestones in Buffett’s investment will help you reshape your understanding of the investment market.
A textbook for happy investing. Buffett's "golden partner" Carol Loomis worked hard and told everyone through Buffett's nearly 50 years of experience. Investment can be a happy thing, and it should be a happy thing
A model of management by doing nothing. Focusing on the history of the rise of Berkshire Hathaway, a detailed analysis of Buffett's achievements and methods in corporate management and mergers, it is proved by irrefutable facts that Buffett is not only an outstanding investor but also an outstanding management master.
About the author
CAROL J. LOOMIS is a senior editor-at-large at Fortune magazine, where she has worked since 1954. She has been the magazine's expert on Warren Buffett since 1966 and has edited his annual letter to shareholders since 1977. Her many honors include five-lifetime achievement awards, including a Gerald Loeb Award for business journalism and Time Inc.'s first-ever Henry Luce Award. This is her first book. She lives in Westchester County.
One of the earliest shareholders of Berkshire Hathaway. For decades, he has been responsible for the editing of Buffett's letter to shareholders. Buffett's close friend. Buffett said: "Except for Munger, friends who are very close to me are considered Loomis."
Excerpts from the original text
A smart brain is very important, but after reaching a certain level, IQ is no longer a key indicator for judging the quality of investment managers. Buffett said: "You don't need a scientist who studies rockets. Investing is not a game where IQ 160 beats IQ 130." The investor's ability to strip away personal emotions and make rational decisions is much more important than the size of his brain. "When others make decisions out of short-term greed or fear, rationality is crucial," Buffett said. "This is the time to make money."—— Quoting from page 125
Tap Dancing to Work Summary
This book is too long. It took a long time to read. If you read it carefully, it will take a long time. After the book was published, Buffett's good friend Bill Gates wrote an article on his reading notes website Gates Notes, and strongly recommended this book.
When I first got this book, I was also very curious: There are already many books about Buffett. What is so special about this book? After flipping through it, I found that, unlike Buffett’s other biographies or features, this book is a compilation of articles about Buffett.
In other words, this book is based on publicly available media materials, and the content is absolutely objective and true. In terms of time span, it basically runs through Buffett's entire career-from 1966 when he was first reported by the media to the end of 2012 when the book was published.
This book describes the details of some of Buffett's past stories in great detail and is still very interesting. What impressed me most was the handling of the Salomon incident in the first half and the investment by BYD in the second half. It would be great if I read this book last year, maybe I bought BYD.
Three main gains: The following is a record of three daily thoughts.
The first is the attitude towards work.
For men, it is true that work is life, after all, the time spent in the family is much lower than that of women. And women may be more passive towards the development of the family and their children, not as great as men’s choice. Then the mentality of work is the mentality of life. The first thing is to decide what to work as work, and the mentality mentions "tap dancing". It must be hard work and fun. Dancing is also very tiring, but you can keep dancing. It also shows that I am really happy. So starting from this mentality, what kind of work can you reflect on to keep you so persistent for a lifetime? Vital.
The second is to cherish credibility.
Buffett used actions and results to prove to the world the value of credibility. Although there are also mistakes, for example, the latter part of the book mentions indulging in internal transactions among employees of the company, but there is no conclusion, and I have not done an in-depth search, but I honestly made my mistakes at the general meeting of shareholders. It is really amazing and extraordinary. People can do it.
The third is about the number of actions.
Although it is mentioned in the book that "the biggest mistake is inaction, not wrong behavior.", I think this is not a contradiction. Looking at the number of transactions of Buffett Munger, this is the difference between precise action and high-frequency action.
Book Review of Tap Dancing to Work
In the 1960s, the Dow Jones Index went up like a crazy bull. American investors suddenly realized that heaven on earth is here, and God is constantly throwing out endless wealth through the perfect machine of the market. They only need to stretch their hands to catch it. There is often no shortage of "heroes" in times that make people's blood boil, including Alfred Winslow Jones, who holds aloft the "hedging banner". "Private equity" is like a curtain. People only know that Jones and his investors are making a lot of money, but they know the "profit artifact" in their hands. Carol Loomis keenly discovered that investors were in certain anxiety because of envy, so she wrote an article about Jones for Fortune magazine. However, in this article that is enough to be included in the history of hedge funds, Loomis left a small "stain". She mistook the name of Buffett, who was still unknown at the time, and missed a "t".
However, this small stain binds Loomis and Buffett tightly like glue. When Buffett dodges the glitz of Wall Street and runs his private equity fund in secluded Omaha. Loomis noticed his presence. She not only became the earliest shareholder of Berkshire Hathaway but also quickly became Buffett's best friend second only to Munger. Of course, like Warren Buffett, the "miser", the better the friend, the easier it is to be "slapped." In order to save costs, Loomis was sent to freely edit "Buffett's Letter to Shareholders", and he did it for decades. In the process of editing Buffett's letter to shareholders, she and Buffett will repeatedly consider the use of a sentence or even a word, just like Buffett personally grinds up against his own thoughts and then pours them into Loomis's mind. Obviously, Loomis, who was able to invest in Buffett at a very early stage, would never do a loss-making business. By providing unpaid labor, she became one of the few people who have deepened the essence of Buffett's thoughts.
The book "Tap Dancing to Work" written by Loomis himself, it contains nearly 100,000 words and speeches written by Buffett himself. Most of these articles are Buffett's thinking on investment and warnings for investors. Through these words, we can not only use Buffett's eyes to see the true meaning of the investment market but also clearly teach him how to think about problems. The reason is king, investment is not a game where high IQ beats low IQ.
On July 20, 1998, Buffett and Bill Gates sat in the auditorium of the University of Washington in Seattle, with 350 students in the audience. When someone asked how you achieved today’s achievements, Buffett said: “Success has nothing to do with IQ. I believe you will be glad to hear this. The key is the reason. I always regard IQ and genius as the horsepower of a car. The final output power depends on rationality. Many people drive a 400-horsepower car but only exert 100-horsepower. The “best state” should be: a 200-horsepower car produces 100% of the 200-horsepower power."
Charlie Munger, the vice-chairman of Berkshire Hathaway, once commented on Buffett: "There are 1,000 people in my Harvard Law School class. I know all the top students, but no one can compete with Buffett. Comparable. His brain is like a super-rational and logical machine. As long as he speaks, you can hear wisdom working.” The reason is a word that many people often talk about, but investors tend to be self-conscious. Acts that are considered to be very sensible are often full of absurdity and ignorance in hindsight. The greed of human nature often wears a mask of "reason" to lure investors into the abyss. How can we be rational? In the book "Tap Dancing to Work", Buffett gave everyone a good reminder: that is, good thinking habits can strengthen human reason and avoid the "corrosion" of greed.
Buffett tends to see the underlying logic of the overall market clearly. He said: "In essence, apart from the true profits of the company, it is impossible for stock investors as a whole to earn a penny more from the stock market." Only the return of investors comes from corporate profits. The stock market is what enables everyone The positive-sum game of benefit is the foundation of the stock market and the fundamental driving force for its development. If the investment is based on the underlying logic of the market, it is equivalent to walking on a wide road. Once investors get used to the road, it is easy to shield the temptation from the trail. The correct market logic is the most solid "margin of safety".
When the entire market is in an irrational state and investors themselves remain sane, opportunities often come. Buffett likes to mine undervalued stocks when the overall market valuation is very low because this will give him a double "margin of safety." In the book "Tap Dance to Work", Buffett explained in detail the criteria for judging the level of market valuation: the total market value of the stock market as a percentage of GDP. He believes that when the ratio of the total market value of the stock market to GDP/GNP is around 80%, it is a good opportunity to enter the stock market. No matter what historical thinking is, anyone will inevitably be affected by the "rear-view mirror effect". When we judge future market trends, we always give too much weight to the previous situation. If the current market conditions are good, we believe that the market will be the same in the future. When the market was in a big bull market, Buffett said: "Everyone has already become the dog under the experiment of the famous Russian psychologist Ivan Pavlov. You only need to hear the bell ringing at 9:30 in the morning on the New York Stock Exchange. There is something to eat." To break through the limitations of this vision, investors must seek help from historical experience.
Through the history of the US stock market, Buffett has unearthed conclusions that are extremely valuable to investors. Through an in-depth study of the overall return on the US stock market, he found that stocks are actually a kind of "special bond." After deducting factors such as inflation, the compound annual rate of return for stock investors is about 7%. Through the study of the overall valuation level of the US stock market, Buffett discovered the phenomenon of the 17-year cycle. Through research on transaction costs, Buffett found that nearly one-third of investors’ returns have been taken away by various types of “helpers”.
By analyzing the historical returns that investors have received in automobile and aircraft manufacturing companies, Buffett joked: “I’m thinking, assuming I was on the scene when the Wright brothers’ Kitty Hawk took off for the first time, it is likely to be very far-sighted and full of charity (this point is for future capitalists) to try to knock it down." This unique analysis method makes him resolutely not to enter the technology industry.
The person in charge of a subsidiary of Berkshire Hathaway once said, don't let Buffett see any numbers you don't want him to see, because he will remember them. When passing by a Shishi candy store casually, Buffett can blurt out its sales, and Buffett's favorite job is to price the insurance policy. The data-based way of thinking allows Buffett to easily cross the boundaries of investment products. Regardless of investing in stocks, bonds, foreign exchange, or even acquiring companies, in his mind, they have become a series of cash flows obtained in the future. Based on the discount of these cash flows, it can be easily calculated whether their value has been underestimating.
Marshall Weinberg of Gruntal & Co. recalled a dinner with Buffett in Manhattan and said: "He ordered a very special ham and cheese sandwich. Lots of them. Days later, we went out to eat together again. He suggested, “Let’s go to that house.” I said, “But we just went there soon.” He said, “That’s right. So why venture to another house.” What about restaurants you don’t know? We all know what we want to eat.'” Buffett attaches great importance to numbers and probability, but this emphasis is very different from those who are obsessed with quantitative investment. Buffett wrote in his letter to shareholders: "To a certain extent, our success depends on our focus on the one-foot obstacle that can be easily crossed, rather than the ability to seek the ability to cross the seven-foot obstacle. "What Buffett is looking for are projects whose probabilities can be judged through simple methods. If he can't do it, he simply gives up. Quantitative models are much more complicated, and the more complex things are more prone to errors.
The cash machine, the rise of the Berkshire Hathaway Empire.
Buffett, as a "stock god", is almost known to everyone. Even people outside the investment circle know a little about his investment thinking. However, for Berkshire Hathaway, many people only know that it is a stock company and the world's highest stock price. As for the specific business and operating methods of this company, there are very few. The book "Tap Dance to Work" uses a large number of exclusive articles to uncover the mystery of this company and give us a taste of Buffett's outstanding entrepreneurial talents.
Buffett does not want others to talk about Berkshire Hathaway, thinking that its growth mainly comes from buying and selling stocks. After struggling in the textile business for many years, Buffett turned the main direction of Berkshire Hathaway to the insurance industry. This direction brought him a huge resource: floating gold. In the beginning, Buffett used the floating money to invest heavily in stocks, which resulted in handsome returns. Then, as the overall valuation level continues to remain high, it is less and less likely to tap opportunities in the stock market. On the other hand, for companies in which they have a large share of shares, not only do the dividends they receive require a large amount of tax, but also the management communication is not smooth.
In this case, Buffett began to look for a large number of acquisitions of non-listed companies or to privatize listed companies. On the one hand, Buffett can more easily control the flow of corporate cash, on the other hand, it can avoid a large amount of tax burden. This shift in business policy has caused Berkshire Hathaway’s scale to rapidly expand, and its operations have also begun to become diversified. By 2002, Berkshire Hathaway had nearly 150,000 employees, and its businesses included insurance, media, furniture, daily necessities, and jewelry. It is worth thinking deeply about all managers that despite the operation of such a large-scale enterprise, the headquarters of Berkshire Hathaway has only a mere 20 people. Buffett has created an extremely efficient management model that makes all management masters beyond reach. When choosing an acquisition target, Buffett does not pay particular attention to synergies, but usually considers three factors: scale, cash flow, and management.
Choose a company that can be run by fools.
Buffett will say on many occasions that to invest in and buy a company that can be run by fools because one day you will encounter a situation where a fool can run the company. However, this is Buffett's approach to seeking a margin of safety. Buffett expects the acquired company to have extraordinary qualities and to provide the necessary guarantee for its own investment. In fact, Buffett's requirements for management are still very high. Only in this way, Buffett will not fall into the specific business. He will set different performance goals for corporate executives according to the different needs of Berkshire Hathaway. For example, some companies need to contribute "float funds", some companies need to reduce "operating costs", and Of companies may need to get rid of losses. For the management who can exceed the goal, the bonus will not be capped.
The concentration of cash flow.
Buffett himself will not intervene in the daily operations of his companies. He will leave plenty of room for his executives to give full play to their personal talents. However, all the cash flow of its companies must be concentrated in the headquarters of Berkshire Hathaway in Omaha. If any enterprise has investment needs, it must go through the headquarters. From this point of view, we can find that Buffett purchases companies entirely in accordance with the idea of investing in stocks. Investment is the purchase of a series of cash flows in the future. As a result of investing in companies with mature management, Buffett smoothed out the frictions in daily operations. The concentration of cash flow makes him unnecessary to bargain over the distribution plan of the shareholding company.
The scale must be large enough.
As the scale of Berkshire Hathaway continues to expand, if the acquired company is expected to play a certain role in the endogenous growth rate of Berkshire Hathaway, then its scale must be large enough.
Tap dancing to work, happiness is the essence of wealth.
In the book "Tap dancing to work", Buffett summarized his success like this: "My personal view is that success is happiness, and happiness is the foundation of my life. I am grateful that I do what I love every day of my life and work with people I admire. I don’t have to work with people who disgust me. I tap dance to go to work. After I get to the office, I always feel like myself. Lying on the sofa and drawing the ceiling. It's so fun."
Buffett’s eldest son Howard said: “Father is the owner of the land on my farm. I give him a certain percentage of the total income as rent. Maybe I shouldn’t tell you this. The rent is calculated based on my weight. I am tall. 174 cm, about 181 kg. He thinks I am too fat and thinks 165.5 kg is more appropriate. If I exceed this weight, the rent is 26% of the total income; if it is less than this weight, the rent is 22%. This is the Buffett family The original intention of choosing Weight Watchers. I really don’t mind this, because he cares about my health. But what I do mind is that even if it’s 22%, the charges more rent than others around People is much taller. No matter what, he always manages to control everything."
When Gates talked about a past between him and Buffett, he couldn't help laughing: "Warren specially opened one day for me on Sunday. He had to tell me that when he got engaged for the first time, he spent 6% of his total assets to buy a diamond ring. As a witness of sincere love, he felt that I should be like him." When Buffett got married, he was at most. It can only be regarded as a middle class, and when Gates got married, his assets were already tens of billions of dollars. More importantly, Gates' diamond ring was bought in a jewelry store owned by Buffett.
Buffett has long refused to use computers because he prefers to trust his own calculations. However, he finally bought one because he wanted to play bridge online with others. After Berkshire Hathaway purchased a business jet, Buffett deliberately listed the cost in the annual report in a small font that was almost clear...
Through the book "Tap Dance to Work", an old naughty boy The image is vivid on paper. When people are greedy for Buffett's astronomical wealth, he promised to donate all these things. When people are diligent about Buffett’s investment secrets, everyone may overlook the core element that supports these secrets: wealth is not the equivalent of selfish desire.
Although Buffett has accumulated a lot of wealth, he has not been dragged down by selfish desires, which makes his thinking clearer and decision-making sharper. He engages in this profession entirely based on his interests, which makes his happiness simple, like eating burgers and drinking cherry-flavored Coca-Cola.
What does tap dancing work like?
When working in the office, Buffett reads or calls, almost without stopping. From December to March of the following year, he was mainly engaged in the writing of the New Year's report. The annual report has made Buffett's reputation spread far and wide. This is also a job that is extremely important in his life, and he has also gained a strong sense of satisfaction from it.
From Buffett’s body, you can’t see the slightest melancholy. “When I talk to him,” said Hutchins of Shishi Candy, “he always behaves full of energy and has a very positive attitude.” However, it usually comes. Said that he prefers to be alone in the office. Compared with the chattering and amiable talk and amiability when communicating with friends or managers over the phone, Buffett may prefer to be alone quietly.
My duty is to help my senior employees so that they can ignite enough interest in work when they wake up in the morning and continue to work with the same enthusiasm they had when they had an empty wallet and fledgling. If I do these two things, then what they do is innovation
Another habit of Buffett that I admire is that he never sees all kinds of meetings in his schedule. "Rejection" is not an easy task, but Buffett has done a good job. He knows what he likes to do; and as long as he likes it, he will always do it incredibly well.
He likes to sit in his office, read and think. In addition, there are some things he is willing to do, but not many. Lowenstein concludes very accurately in the book that Buffett is a creature that lives according to habits. He grew up in Omaha and is willing to die in Omaha.
He has his own fixed circle of friends, and he prefers to stay with them. He is not a person looking for excitement and new things. Buffett, just over 65, still lives in the house he bought when he was 25 in Omaha. His insistence on convention also extends to the investment decisions he makes. He always sticks to those companies that make him comfortable. He also rarely invests in countries outside the United States.
Like all craftsmen, Buffett has always adhered to his principles. Marshall Weinberg of Gruntal & Co. still remembers his dinner with Buffett in Manhattan. He recalled: "Buffy featured a very special ham and cheese sandwich.
After many days, we went out to eat again, and he suggested, 'Let's go to that house. 'I said, 'But we just went there soon. 'He said, 'Yes. So why risk going to another restaurant you don’t know? We all know what we want to eat. 'And this is how Buffett looks at stocks. He only invests in those who have a greater chance of winning and will not disappoint
Simple, success has nothing to do with IQ. I believe you will be glad to hear this. The key is the reason. I have always regarded IQ and genius as the horsepower of a car, and the final output power depends on the reason. Many people drive a 400-horsepower car but only exert 100-horsepower. The "best state" should be: a 200-horsepower car can give out 100% of its 200-horsepower power.
Is age anxiety really necessary?
Ross immigrated to the United States from Russia when he was young and opened a small furniture store. Her motto is "low prices, honest sales", so the prices of goods in the store are very low. Last year, the company's annual sales reached 140 million U.S. dollars. The 94-year-old Ms. Blukins still insists on working in the carpet department and works 7 days a week.
Buffett praised Ms. Blukins in the latest annual report: She is doing her best, "May release her full potential in the next 5 to 10 years. Therefore, I urge the board to abolish our '100-year-old mandatory retirement' policy. ". He still didn't forget to make a joke of himself: "Every year I pass by in a hurry, I feel that this policy is also a bit stupid for me."
Although it is a joke, Buffett does not regard age as a criterion for measuring a professional manager. Perhaps this is because he loves good management teams and wants to be firmly tied to them.
At that time, he had many old managers under his staff, and Buffett also admired their abilities very much. "Oh my God," he said, "good managers are too rare, and I really can't bear to let them leave me. And it would be a shame if the reason for leaving is just that their age has increased by one year. "
There is absolutely no absolutism even if he is "God"
It cannot be because we have made a lot of money that we can come up with the best advice on all issues. If this is the case, it would be too arrogant.