American Publisher Releases Book on Warren Buffet by HSE Associate Professor

Associate Professor in the HSE Faculty of Economics (School of Finance) Elena Chirkova’s book The Warren Buffett Philosophy of Investment: How a Combination of Value Investing and Smart Acquisitions Drives Extraordinary Success has just been published in the U.S. and U.K. by McGraw-Hill Professional, an American publisher. In a recent interview with the HSE news service, Professor Chirkova spoke about why she wrote it. 

— What made you decide to research and write about one of the most famous entrepreneurs and investors in the world?

— A friend of mine advised me to read Warren Buffett’s letter to the shareholders of the company he runs, Berkshire Hathaway, as an example of clear and logical writing on financial markets and corporate finance. When I got interested in the subject people started giving me books about Buffett. They were about how you can get very rich, with investing almost no money but using his approaches to investment. I could see that with the help of the strategies described you wouldn’t be getting super high returns. So I became intrigued in how he actually made his money. And I wanted to find an answer to the negative question ‘What are the factors that make it impossible to make a lot of money?’   

Non-professional investors don’t like the answers to negative questions. They like ready-made recipes for success. For a thinking person, however, these answers are even more important than the answers to positive questions. 

— How did you compile your material? Did you manage to meet the famously eccentric Warren Buffett?

— I don’t agree that Warren Buffet is eccentric. He does sometimes pick up the one cent coins from the floor, but only if he’s being photographed. It’s the carefully calculated PR image of a thrifty individual. And, yes he drinks Coca Cola publicly because he’s a major shareholder in the company and knows it is good for marketing. I haven’t tried to get a meeting with Buffett because I thought it was so unlikely to happen. And there is plenty of material about him and his company in the public domain. If I did get to meet him, I wouldn’t ask him about investments but about his private life. I’d like to ask whether he was in love with Katherine Graham, the controlling shareholder of The Washington Postwho introduced him into New York society. She turned his life around in the same way Marina Vlady did for Vladimir Vysotsky. I’m not sure that he would answer, though, because it’s nowhere to be found – not even in his authorized biography.    

— What would you say are Warren Buffett’s rules for life and business?

— In the book, I didn’t try to formulate his rules for life but if one wants to learn about his investment principle he should read my book. In a word, I could only repeat the kind of banalities you find in any of the dozens of books on Buffett.

— Your book is recommended for corporate training courses and obviously it will be useful for Russian students of finance and for businessmen. Why was it published in English? Are there plans for a Russian edition?

— The first version was published in Russian in 2007 by Alpina Publishers, but a Russian publication of this new version is not planned.

It is published in English because my literary agent who knew the Russian version well thought that it was worth translating into English and that she could sell the rights. I gave her a chance.

I was well aware that the contents of the book were unique, and the book merited translation into English but I didn’t think people would buy it even though the Russian version has earned a lot of recognition and had good reviews. McGraw-Hill took a gamble and bought the rights without the editor even seeing the English translation. When she finally got to read it, she liked it a lot. I myself would like to know how my editor made up her mind to take it. 

Of course, the subject matter helped. Books on finance are as popular as fiction in the US. Buffett is an exceptional figure and although there are a huge number of books about him already, there is definitely a market for something that approaches him from a different angle. There are a lot of new ideas in my book. Writing about the factors beyond the financial theory that brought him success, as I already mentioned, I also analyze his tactics in merger and acquisition deals; other authors focus on his portfolio of investments.   

— What did you gain from studying the life and working methods of such a talented and complex person as Warren Buffett?

— A great deal. I’m an investor myself and I follow his principles when I invest. I’ve set forth my own position regarding his principles—they don’t make you rich but they are an excellent insurance against losing money. His most important rule is—only invest when you know the people running the company and are absolutely sure that they are honest and won’t steal a cent from the company. Following this principle will keep you from investing in a lot of Russian stocks and shares. Guided by it, I have put money into very high-risk ventures, but ones that are run by honest people. I didn’t lose anything although it was hard for them to pay me back; any not very decent person would point to the troubles in the economy and try to give me less. 

— What are you working on now?

— At the moment I’m writing an article called ‘Warren Buffett and Nassim Taleb — How, Avoiding Negative Black Swans, to Breed a Positive Black Swan’.

Anna Chernyakhovskaya, specially for HSE News service