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The Tao of Warren Buffett by Mary Buffett and David Clark is a fun read that can be finished in about an hour and a half. Mary Buffett, as the name may reveal, was Warren's daughter-in-law for over 12 years. She and Clark also wrote the more meaty Buffettology series, which attempts to break down the world's most successful investor's strategy and thinking.

Tao is a lightweight book that takes 125 of Warren's quotes and aphormisms, and attempts to explain their assumed meaning in practical terms. The book breaks these quotes in 14 categories to which they apply. Some categories are "Getting and Staying Rich", "Why Not to Diversify", and "Beware the Folly of Greed". Overall, I thought the explanations were insightful, even though many of the quotes have obvious meaning. More obtuse quotes get more paragraphs of explanation, and the fairly straightforward ones are only lightly expanded upon.

But the real value of this book is not in the explanations, it's in the collection of quotes. Obviously, several of Buffett's oft-repeated sayings are in the book: "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1". "We enjoy the process far more than the proceeds, though I have learned to live with those also". Many of the quotes are insights into Buffett's recognized strategy of making a few big bets on predictable businesses at low prices, and holding virtually forever. Several other themes of Buffett's thinking can be extracted from these quotes as well. Warren ridicules the Wall Street culture and several quotes expose the folly of trusting your investments to a paid advisor. He recognizes that short term prospects drive current stock prices but that long term business values drive future stock prices. There are also some useful things to remember about business. Warren warns that up-market brands should never go down market to gain sales, that weak management is reflected in weak accounting, and so on.

In summary, there is nothing particularly revealing about Buffett that hasn't been said a hundred times before. But there are likely to be a couple dozens of quotes that will make you smile and think for a minute. It's cheap and a quick read, and highly recommended for all investors as food for thought. A couple of MagicDiligence favorites below:

"There is a huge difference between the business that grows and requires a lot of capital to do so and the business that grows and doesn't require capital."

A core tenant of the Magic Formula Investing strategy.

"I'd be a bum on the street with a tin cup if the markets were efficient."

For anyone who believes in the Efficient Market Theory and insists on indexing to the stock market, here is fuel to consider picking some individual value stocks.

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