Table of Contents

1. Cover
2. Title Page
3. Copyright
4. Dedication
5. Preface
   1. Reference
6. Acknowledgments
7. 1 Who Is Warren Buffett?
   1. Introduction
   2. Buffett the Teen
   3. Who Are We to Write This Book?
   4. What Is Financial Literacy and Why Does It Matter?
   5. Some Fundamental Buffett “Tips”
   6. Buffett's Work Ethic
   7. Buffett Has Spent a Lifetime Learning
   8. Why Is Buffett Happy?
   9. Improve Your Communication Skills and See Your Lifetime Earnings Increase 50%
   10. Acting with Integrity Is the Right Thing to Do and Good for Business
   11. Buy Low, Sell High
   12. Buffett Doesn't Succumb to Peer Pressure: The Inner Scorecard
   13. Buffett's Fallback Career—Comedian
   14. Buffett's Lasting Legacy: Philanthropy
   15. References
8. 2 Investment Fundamentals According to Buffett
   1. Introduction
   2. The “Miracle of Compound Interest” Explained
   3. Trade-Offs: A Fundamental Principle of Life
   4. The Saint Petersburg Paradox: A Lesson on Risk and Return
   5. Risk and Return: The Evidence
   6. Diversification: One of the Few Free Lunches in Life
   7. Supply and Demand Determine Price
   8. Summary on Financial Fundamentals
   9. References
9. 3 Bank Accounts, Debit Cards, Credit Cards, and Your Credit Score
   1. Introduction
   2. Insured Bank Deposits
   3. Savings Accounts and Certificates of Deposit (CD)
   4. Checking Accounts and Electronic Bill Payment
   5. Parts of a Check
   6. Balancing a Checkbook
   7. Debit Cards and Automated Teller Machines (ATM)
   8. Credit Cards and Charge Cards
   9. Apps to Send Money: PayPal, Venmo, Zelle, Apple Pay, Android Pay, and so forth
   10. Your Credit Score: A Report Card of Your Financial Responsibility
   11. Personal Bankruptcy: Try to Avoid at all Costs
   12. A Word on Bitcoin from Buffett
   13. References
10. 4 Bonds and Inflation
    1. Introduction
    2. US Savings Bonds
    3. Other US Treasury Fixed Income Securities
    4. Inflation and the Consumer Price Index (CPI)
    5. Bond Ratings and Corporate Bankruptcy
    6. Corporate Bonds, Municipal Bonds, and Bowie Bonds
    7. Bowie Bonds and Other Asset-Backed Securities
    8. The Federal Reserve: The Central Bank of the United States
    9. What Determines Interest Rates?
    10. Intuition on Estimating the Price of a Bond
    11. So Are Bonds Good Investments?
    12. A Note on Negative Bond Yields
    13. Appendix
    14. References
11. 5 Stock Market Fundamentals
    1. Introduction
    2. Initial Public Offerings (IPOs): The Birth of a Stock
    3. Investment Banks and Investment Bankers
    4. The Main Event: The Stock Begins Trading on the Exchange
    5. The Stock Exchange
    6. A Sidebar on Stock and Mutual Fund Symbols
    7. Dividends
    8. Large Cap vs. Small Cap
    9. Growth vs. Value
    10. Domestic vs. International
    11. An Index Fund: A Great “Set It and Forget It” Long-Run Investment
    12. Beating the Market and the Efficient Market Hypothesis
    13. Meet Mr. Market, the Manic-Depressive Stock Market
    14. Appendix
    15. References
12. 6 Buffett's Approach to Stocks
    1. Introduction
    2. Estimating the Value of a Stock
    3. Getting a Price Target with the Discounted Cash Flow Model
    4. Getting a Price Target with the Wall Street P/E Model
    5. Buffett's Approach to Stocks
    6. Getting into the Buffett Mindset on Investing
    7. Stay within Your Circle of Competence
    8. The Importance of Being Patient
    9. Good vs. Bad Companies and the Passage of Time
    10. How Buffett Thinks About Change in an Industry
    11. Types of Businesses Buffett Likes
    12. Demonstrated Consistent Earnings Power
    13. Look for Companies with Good Management
    14. Buy Companies That Have the Power to Overcome Inflation
    15. Focus on Firms with Favorable Long-Term Prospects
    16. When to Sell
    17. Summarizing Buffett's Approach
    18. References
13. 7 Accounting Fundamentals: The Report Card for Businesses
    1. Introduction
    2. The Income Statement: A Company's Report Card for One Period
    3. Apple's Income Statement
    4. The Balance Sheet: A Picture of a Company's Report Card Since Inception
    5. Current Assets
    6. Long-Term Assets
    7. Liabilities
    8. Current Liabilities
    9. Long-Term Liabilities
    10. Stockholders' Equity
    11. A Quick Note on the Statement of Cash Flows
    12. Summary
    13. References
14. 8 Buffett's Approach to Portfolio and Risk Management
    1. Introduction
    2. The Key to Selecting a Well-Diversified Portfolio: Correlation
    3. A (Theoretical) Portfolio with No Risk
    4. Selecting an Optimal Diversified Portfolio: The “Business School” Approach
    5. Buffett's First Approach to Portfolio Selection: Index Funds
    6. Buffett's Second Approach to Portfolio Selection: Expert Mode
    7. A Compromise Solution to Portfolio Selection
    8. How Many Stocks Make a Diversified Portfolio?
    9. The “Business School” Approach to Risk
    10. Buffett's Critique of the Business School Approach to Risk
    11. Buffett's Approach to Risk
    12. Buffett on Gold
    13. Summarizing Buffett's Views on Risk
    14. Endnote on CAPM
    15. References
15. 9 Business 101: Companies You Should Know
    1. Introduction
    2. The Dow Jones Industrial Average: The Oldest Diversified US Stock Market Index
    3. How the Dow Is Calculated
    4. An Explanation of Stock Splits
    5. Different Share Classes and Buffett on Stock Splits
    6. Current Stocks in the Dow Jones Industrial Average
    7. Materials Stocks in the Dow
    8. Chevron (NYSE: CVX)
    9. Dow Chemical (NYSE: DOW)
    10. Consumer and Business Services Stocks in the Dow
    11. Home Depot (NYSE: HD)
    12. McDonald's (NYSE: MCD)
    13. Walmart (NYSE: WMT)
    14. Consumer Goods Stocks in the Dow
    15. Apple (NASDAQ: AAPL)
    16. Coca-Cola (NYSE: KO)
    17. Nike (NYSE: NKE)
    18. Procter & Gamble (NYSE: PG)
    19. Walgreens Boots Alliance (NASDAQ: WBA)
    20. Walt Disney (NYSE: DIS)
    21. Financial Stocks in the Dow
    22. American Express (NYSE: AXP)
    23. Goldman Sachs (NYSE: GS)
    24. JPMorgan Chase & Co. (NYSE: JPM)
    25. Travelers (NYSE: TRV)
    26. Visa (NYSE: V)
    27. Health Care Stocks in the Dow
    28. Amgen (NASDAQ: AMGN)
    29. Johnson & Johnson (NYSE: JNJ)
    30. Merck & Co. (NYSE: MRK)
    31. UnitedHealth Group (NYSE: UNH)
    32. Industrial Goods Stocks in the Dow
    33. Boeing (NYSE: BA)
    34. Caterpillar (NYSE: CAT)
    35. Honeywell (NYSE: HON)
    36. 3M Company (NYSE: MMM)
    37. Technology Stocks in the Dow
    38. Intel (NASDAQ: INTC)
    39. International Business Machines (NYSE: IBM)
    40. Microsoft (NASDAQ: MSFT)
    41. salesforce.com (NASDAQ: CRM)
    42. Telecommunications Services Stocks in the Dow
    43. Cisco Systems (NASDAQ: CSCO)
    44. Verizon (NYSE: VZ)
    45. Some Blue-Chip US Stocks That Aren't in the Dow
    46. The FANG Stocks—They Don't Bite
    47. China's Emerging Titans
    48. Some International Energy Titans
    49. Some Global Consumer Titans
    50. Some Global Financial Service Firms
    51. References
16. 10 Business 101—Past and Present Business Leaders, or Who's Who in Business
    1. Introduction
    2. Past Business Leaders
    3. Rose Blumkin (Mrs. B)
    4. Andrew Carnegie
    5. Walt Disney
    6. Thomas Edison and Jack Welch
    7. Henry Ford
    8. Katharine Graham
    9. William Randolph Hearst
    10. Steve Jobs
    11. Ingvar Kamprad
    12. Ray Kroc
    13. Estee Lauder
    14. J.P. Morgan
    15. John D. Rockefeller
    16. Cornelius Vanderbilt
    17. Sam Walton
    18. Thomas Watson Jr.
    19. Present Business Leaders
    20. Bernard Arnault
    21. Mary Barra
    22. Jeff Bezos
    23. Richard Branson
    24. Michael Bloomberg
    25. Sergey Brin, Larry Page, and Sundar Pichai
    26. Shawn Carter, Beyoncé Knowles, Sean Combs, and Andre Young
    27. Tim Cook
    28. Jamie Dimon
    29. Jack Dorsey
    30. Bill Gates, Paul Allen, and Steve Ballmer
    31. Reed Hastings
    32. Kylie Jenner and Robyn Fenty
    33. Phil Knight
    34. Jack Ma, Pony Ma, and Robin Li
    35. Rupert Murdoch
    36. Elon Musk
    37. Amancio Ortega
    38. Howard Schultz
    39. Oprah Winfrey
    40. Mark Zuckerberg and Sheryl Sandberg
    41. References
17. 11 Being Thrifty like Buffett: Ways to Save Money
    1. Introduction
    2. Your Library: Free Books, Magazines, Newspapers, Music, Movies, and More
    3. Free Educational Courses: Khan Academy, Coursera
    4. Websites for Free Stuff
    5. Free Activities
    6. Amazon.com: The World's Biggest Store
    7. Comparison Shopper Tools: Your New Best Friend
    8. Barter: Turning a Cell Phone into a Porsche Convertible
    9. Eat a Low-Cost Meal, Periodically
    10. Shop Private Label and Generic Items
    11. Clothes: Outlet Stores, Vintage Items, and Buying Off-Season
    12. Buying Gasoline
    13. Coupons, Double-Couponing, Triple-Couponing, and Groupon
    14. Rewards Programs
    15. Negotiate with Cell Phone, Cable, and other Service Providers
    16. Yard Sales, Flea Markets, and More: Turning Trash into Treasure
    17. Do-It-Yourself
    18. Donate Things to Charity
    19. Avoid Shooting Yourself in the Foot with Bad Habits
    20. Tying It All Together in a Budget
    21. Appendix: Sample Budget
    22. References
18. 12 Buffett's Views on Cars and Homes
    1. Introduction
    2. Do You Need a Car?
    3. New Cars vs. Used Cars
    4. Buying vs. Leasing a Car
    5. The Best Time to Buy or Lease a Car
    6. Home Basics
    7. Finding A Home
    8. Bidding for a Home
    9. Paying for a Home: The Down Payment
    10. Paying for a Home: The Mortgage
    11. A “House Hack”: Getting Someone to Pay (Most of) Your Mortgage
    12. Looking Under the Hood of a Mortgage
    13. What Determines Home Prices?
    14. References
19. 13 Buffett on Dale Carnegie, Communication Skills, and Emotional Intelligence
    1. Buffett Learns Life-Changing Skills in a Dale Carnegie Course
    2. CliffsNotes Version on Dale Carnegie and How to Win Friends and Influence People
    3. Things How to Win Friends and Influence People Will Do for You
    4. Techniques in Handling People According to How to Win Friends and Influence People
    5. Six Ways to Make People Like You According to How to Win Friends and Influence People
    6. How to Win People to Your Way of Thinking, According to How to Win Friends and Influence People
    7. What Is Emotional Intelligence (EQ)?
    8. Emotional Intelligence (EQ): Some Details
    9. Have A Great Posse
    10. References
20. 14 Buffett's Tips for College
    1. Introduction
    2. College: The Basics
    3. Getting into a College
    4. Graduate School: Optional for Some Jobs, Mandatory for Others
    5. Paying for College: Scholarships and Grants
    6. Paying for College: The Three-Year Plan for Super Achievers
    7. Paying for College: 529 Plans
    8. Paying for College: Student Loans
    9. Paying for College: On- and Off-Campus Jobs
    10. Your Resume: A Snapshot of Your Qualifications for a Job
    11. Putting Together Your Resume
    12. The Objective Section
    13. The Education Section
    14. The Work Experience Section
    15. The Skills Section
    16. The Activities and Interests Section
    17. Cover Letter
    18. Appendix
    19. References
21. 15 Buffett's Tips for Careers
    1. Introduction
    2. LinkedIn Profile: Your Online Resume
    3. Finding an Internship or Job
    4. The Job Interview(s): Preparation
    5. The Job Interview(s): Acing Your Interview
    6. The Job Interview(s): Compensation, or Show Me the Money!
    7. Succeeding on the Job
    8. Financial Paperwork After Getting a Job
    9. Forms W-2 and W-4
    10. Form 1040: The Annual Income Tax Form and “The Buffett Rule”
    11. Retirement Plans
    12. Becoming a 401(k) or IRA Millionaire
    13. Appendix
    14. References
22. 16 Buffett's Tips for Philanthropy
    1. Buffett's Huge Gift and the Giving Pledge
    2. Getting Involved in Philanthropic and Charitable Activities
    3. Measuring Performance
    4. Market-Based Economies Are Good … Unless You Wind Up as Roadkill
    5. It's Not All About the Benjamins
    6. The Loss of Reputation Hurts More Than the Loss of Money
    7. Inheritance Matters
    8. Buffett's Definition of Success
    9. Appendix
    10. References
23. Glossary of Financial Terms in “Plain English”
24. Index
25. End User License Agreement

List of Tables

1. Chapter 1
   1. Table 1.1 Unemployment rates and earnings by educational attainment, 2019
2. Chapter 2
   1. Table 2.1 Risk and Return in the US: 1926–2019
3. Chapter 3
   1. Table 3.1

List of Illustrations

1. Chapter 2
   1. Figure 2.1 $10,000 Invested With Buffett or in a Small Cap Value Index Fund ...
   2. Figure 2.2 Supply-Demand Diagram
2. Chapter 3
   1. Figure 3.1 A Sample Check
   2. Figure 3.2 Components of a Credit Score
3. Chapter 4
   1. Figure 4.1 The U.S. Treasury Yield Curve, April 2020
   2. Figure 4.2 Consumer Price Index Components
4. Chapter 5
   1. Figure 5.1 Edison Stock Ticker Machine
   2. Figure 5.2 The Style Box
5. Chapter 7
   1. Figure 7.1
   2. Figure 7.2
6. Chapter 8
   1. Figure 8.1 Selecting an Optimal Portfolio from the Efficient Frontier
   2. Figure 8.2 Graph of the “Business School” Approach to Risk
   3. Figure 8.3 Graph of the Capital Asset Pricing Model
7. Chapter 11
   1. Figure 11.1 Google Shopping Fitbit Charge 3 Results
8. Chapter 12
   1. Figure 12.1 Amortization Schedule for a Typical Mortgage

Guide

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3. Begin Reading