If you’ve ever hung out on Finance Twitter or browsed a bookstore’s investing section, you’ve seen it. That plain, white-covered book titled The Essays of Warren Buffett. It’s basically the "Holy Grail" for value investors.
But honestly? Most people who buy it never actually finish it.
They treat it like a trophy for their bookshelf rather than a manual for their life. That’s a mistake. Because tucked inside those pages—which are really just a collection of annual letters to Berkshire Hathaway shareholders curated by Lawrence Cunningham—is a philosophy that’s way more radical than "buy low, sell high."
In 2026, with the S&P 500 hitting new highs and AI hype reaching a fever pitch, Buffett’s "old school" wisdom feels surprisingly fresh. Or maybe it’s just that the rest of the world has gone a little crazy.
What are The Essays of Warren Buffett actually about?
Most people assume the book is a dry collection of stock picks. It’s not. It’s a deep dive into how a business should actually function.
Buffett doesn't care about "the market" in the way most people do. He thinks the market is there to serve you, not to instruct you. He famously uses the "Mr. Market" analogy, borrowed from his mentor Ben Graham.
Imagine you have a partner in a private business named Mr. Market. Every day, he offers to buy your interest or sell you his. Sometimes he’s manic and asks for a ridiculous price. Sometimes he’s depressed and offers you a steal.
You’ve got the power. You don’t have to do anything. You only act when his price is crazy enough to give you a margin of safety.
The Circle of Competence
This is probably the most misunderstood part of his writing. Buffett doesn't say you need to be an expert in everything. In fact, he says the opposite.
You just need to know where the edge of your knowledge is.
If you understand how a local insurance agency makes money but you have no clue how a semiconductor is manufactured, stay in the insurance lane. Over the years, Buffett has stayed away from tech for long stretches because it was outside his "circle." He didn't care if he missed the gains; he cared about avoiding the losses he couldn't predict.
The "EBITDA" Trap and Why He Hates It
If you want to see Buffett get truly spicy in his letters, look up what he says about EBITDA. Most Wall Street analysts love it. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.
Buffett calls it "nonsense."
Why? Because it ignores depreciation. He often asks, "Does management think the Tooth Fairy pays for capital expenditures?"
When a company buys a fleet of trucks, those trucks wear out. That's a real expense. By adding depreciation back into the "earnings" to make the numbers look better, companies are basically lying to themselves—and you. He prefers "owner earnings," which is the actual cash a company can take out of the business after it pays to maintain its competitive position.
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Management vs. The "Leaky Boat"
There’s a legendary quote in the essays: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
Basically, you can be the best rower in the world, but if your boat is leaking, you’re still going to sink.
Buffett looks for "moats." He wants businesses that are hard to compete with, like GEICO’s low-cost structure or See’s Candies’ brand loyalty. He’s not looking for geniuses to fix broken companies; he’s looking for great companies that are so easy to run that, in his words, "an idiot could run them—because eventually, one will."
How to actually read these letters in 2026
You could go to the Berkshire Hathaway website and read every letter from 1965 to now. It’s free. It’s also exhausting.
The reason the Lawrence Cunningham book matters is that it organizes these letters by topic. Instead of jumping from 1984 insurance talk to 1985 textile talk, you can read everything Buffett has ever said about Corporate Governance or Acquisitions in one sitting.
A few things that might surprise you:
- He admits his mistakes. He talks openly about the "Dexter Shoe" blunder, where he gave away Berkshire stock for a company that eventually went to zero.
- He’s a fan of simplicity. He hates complex "synergy" talk in mergers. He thinks most mergers are just CEOs wanting to build bigger empires at the expense of shareholders.
- Cash is "ammunition." While others think holding cash is a waste because of inflation, Buffett sees it as a call option on every other asset class. When the world panics—like in 2008 or the occasional flash crashes we see now—he’s the only one with the dry powder to buy.
Actionable Lessons for Your Own Portfolio
If you're looking to apply The Essays of Warren Buffett to your own life today, stop looking at the tickers. Seriously.
- Define your circle. Write down three industries you actually understand. How do they make money? What could kill them? If you can't answer that, don't buy the stock.
- Look for the moat. If a company makes a 20% profit margin, why aren't ten other companies coming in to steal that profit? If the answer is "they have a cool app," that's not a moat. If the answer is "it would cost $10 billion to replicate their infrastructure," that’s a moat.
- Check the "owner earnings." Don't trust the "Adjusted EBITDA" in an earnings presentation. Look at the Cash Flow Statement. Is the company actually generating more cash than it's spending on its equipment?
- Ignore the macro. Buffett famously doesn't care about what the Fed does next week. He buys businesses he wants to own for 20 years. If you wouldn't be comfortable owning a stock if the market closed for five years, you shouldn't own it for ten minutes.
The real secret of the essays isn't a math formula. It's temperament. As he says, "Investing is simple, but not easy." The math is 5th-grade level. The hard part is sitting still when everyone else is running for the exits or chasing the next shiny object.
Next Steps for You:
Start by reading the section on "The Dividend Controversy" in the Cunningham collection. It’s the best explanation you’ll ever find on why a company should (or shouldn’t) give money back to its owners. After that, pick one company you own and try to calculate its "owner earnings" using the 10-K filing. It’ll change how you look at your portfolio forever.