Acknowledgments

So many people have contributed to the writing of this book, it is difficult to know where to start.

Thanks must initially go to Warren Buffett for his kind permission to quote from his letters to the shareholders of Berkshire Hathaway, for his compliments on this work, and for his well wishes.

The use of further quotes from the Outstanding Investor Digest (OID), which provides, among other things, a write-up of Berkshire Hathaway’s annual meeting, has also improved the book enormously.* My thanks go to Henry Emerson for allowing me to quote from this publication and to Clara Cabrera who facilitated the process. It was Duncan Clark, ex-managing director at Brown Brothers Harriman in London, who first alerted me to the writings of Charlie Munger, and therefore to the service provided by the OID. Both have proven invaluable. It comes as no surprise that Buffett recommends Henry’s publication to investors everywhere. I only hope I can extend that readership to include a few managers.

This book would not have been possible save for the efforts of all those who have gone before me in writing about Warren Buffett. In this regard, I found the works of Andrew Kilpatrick and Roger Lowenstein particularly valuable and would commend their reading to anyone with an interest in this subject. Andrew Kilpatrick’s Of Permanent Value represents a vast repository of information on Buffett and Roger Lowenstein’s Buffett: The Making of an American Capitalist is a must for any serious student of Buffett. The writings of Robert Hagstrom, particularly The Warren Buffett Portfolio and Latticework, have also proven enlightening.

It was Mike Mauboussin, managing director and chief US investment strategist at Credit Suisse First Boston and co-author with Alfred Rappaport of Expectations Investing, who lit the spark to this fire. At a meeting in London Mike was kind enough to scribble the names of a handful of books that I should read on the back of a business card. From there, I went to the nearest bookstore and bumped into Stephen Pinker’s How the Mind Works, which was not on Mike’s list but is a text that I now know he would have recommended. All else followed. Thank you, Michael.

My colleagues at the C.I.S. have provided support, advice, and insights.* Thanks to Linda Desforges and Mark McBride on the US desk in this regard. And a further thank-you to Neal Foundly, pension fund manager, Chris Hirst, chief investment manager, and John Franks, deputy chief investment manager, for taking the time to read, edit, and improve the manuscript. Neal Foundly’s input was profoundly reassuring, Chris’s backing most welcome, and John Franks’ editorial input invaluable.

On that note, I’m also grateful to all those who took part in the feedback process, which did much to shape the book near its completion: Duncan Clark, James Becker of Pereire Todd in London, Frank McCann, also of the C.I.S., Rupert Carnegie, director of global research and strategy at Henderson, Mark Thomas of PA Consulting, who leads the shareholder value work in PA’s Management Group, Chris Mack, executive director, Goldman Sachs International, and Dr. Gulnur Muradoglu, Cass Business School, London, all contributed meaningfully to this task.

My particular thanks with regard to feedback go to Hersh Shefrin, Arnold Wood, Bob Olsen, and Nick Chater, details of whom appear at the beginning of this book. Aside from Nick, who was a recent professional acquaintance, none of these people knew me before I approached them to ask if they would take a look at my manuscript. Each gave unselfishly of their time and their encouragement of the project was heartening—as was their willingness to give it their public endorsement.

Thanks also to Edgar Peters, author of several highly readable books and chief investment strategist for Panagora Asset Management, for his early encouragement of this project and his advice to a budding author, to Alice Schroeder at Morgan Stanley for her insights into the insurance industry, to Denis Hilton, Professor of Social Psychology at the University of Toulouse, for sending me his lecture notes, and to Dave Crowther for his feedback, insights, and encouragements and for all those early dialogs we had as colleagues.

This book is unrecognizable compared to the original version that I sent to my publisher Nick Brealey. I am eternally grateful to Nick that, on receipt of that package in 1999, he reacted in the way of the small boy when his father presented him with a pile of manure on Christmas Day. With a cry of “There’s got to be a horse in there somewhere!” he jumped right in and started to dig.

Nick’s digging has, I hope, paid off. His editorial contribution has done a great deal to extract a book from a manuscript and now, as I put the finishing touches to the creation that he has done much to influence, I finally feel able to forgive him the “torture” that he put me through. I only hope that he feels able to reciprocate.

I also take my hat off to Sally Lansdell, my editor, who displayed considerable understanding of the text in its editing. She has improved the book’s readability enormously, was a joy to work with, and pulled out all the stops when necessary. Any residual errors and oversights are completely my own and I absolve anybody who has had a hand in this book from responsibility for any of its shortcomings.

Lastly, my wife Sarah has been unstinting in her efforts to free up my time to work on this book, particularly at the weekends. Sarah has been my biggest fan, my most vocal cheerleader, and a willing reader of every word I have written. Her support throughout has been immense, matched only by the patience of Harry and Niamh, my children, who each typed at least one word of this book. I could not have done it without their understanding and I love them dearly.