Dancing to Work: Warren Buffet On Practically Everything (1966-2012) – A Fortune Magazine Book compiled by Carol J. Loomis describes the tremendous rise in the stock market and real growth in stock values over the years from 1966 to 2012. The Dow Jones Industrial Average grew by a factor of over 15 from 984 to 15,000 or more currently. Much of the book covers deeply held beliefs of Warren Buffet on investing and the financial markets.
Berkshire Hathaway stock grew from $22 a share to over $133,000 a share during that same period. Buffet believes that the greatest stock values can be achieved by companies whose stock values are mis-appraised by the markets.
Buffet is very proud of his achievements in helping to guide the Grinnell College Endowment Fund from a mere $8 million to $1.5 billion. Buffet explains that investors crave volatility because solid values can be purchased at dirt cheap prices.
Buffet has a healthy skepticism with regard to derivative transactions. He would require every CEO with significant derivative exposure to certify that every derivative holding is understood fully at the level of the CEO. Under this scenario, CEOs would be more careful with risk taking in favor of a more judicious approach.
Buffet likes big companies with large cash flow positions. One such company is American Express which has had an historical good cash position. The author likes to buy high quality assets in tight money markets. For instance, he bought huge amounts of Coca Cola after the ’08 crash. These stocks have risen substantially in value.
Buffet would like to expand foreign trade by issuing Import Certificates to United States exporters equal to the value of our exports. Each exporter would be required to sell Import Certificates to foreign exporters abroad to export to the United States. According to Buffet, this type of a program would encourage greater volumes of United States exports.
Tap Dancing to Work is an excellent book on how to buy smart in order to acquire top assets cheaply while watching them grow to multiples of their original purchase price in recovering markets. This book will benefit a wide constituency of investors including those who are risk averse, as well as risk takers.