Book Summary
Published by Scribner on November 21, 2006, The Tao of Warren Buffett is a collection of 125 of Warren Buffett’s aphorisms and sayings, each paired with the authors’ plain-English interpretation of what Buffett meant — and what an investor should do about it. It is a follow-up to the authors’ bestselling Buffettology series, and it is built on the same premise: that Buffett’s thinking can be learned, saying by saying, by anyone willing to study it.
The book’s most famous entry is its first lesson: Buffett’s Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1. The rest of the book works in the same register — short, blunt observations about price and value, patience and temperament, fear and greed — each one followed by a page or so of explanation. There is no single argument to follow and no system to learn; the book is designed to be read a page at a time, like a book of proverbs.
What makes the book work is its voice. Buffett’s sayings are quotable because they compress a whole philosophy into a sentence, and the authors’ interpretations keep the focus practical — what the saying means for someone deciding whether to buy, hold, or sell. A note for buyers: this is the 2006 original, not a newer book of a similar name published in 2024. The two are different books, and this review covers only the original.
Buy The Tao of Warren Buffett on Amazon
Who is Mary Buffett and David Clark?
Mary Buffett was Warren Buffett’s daughter-in-law for twelve years, from 1981 to 1993, when she was married to his son Peter — years that gave her a close-up view of how Buffett thinks about businesses, money, and the people who run them. She has spent the decades since writing about that thinking, and the Buffettology books she wrote with David Clark became bestsellers on the strength of their claim to explain Buffett’s method from the inside.
David Clark is a portfolio manager and attorney, and a noted Buffettologist — one of the small group of writers who have made a career of studying Buffett’s letters, speeches, and investments. Together, he and Mary Buffett built the Buffettology series into one of the most popular introductions to value investing, and The Tao of Warren Buffett is their most quotable entry in it: less a textbook than a field guide to Buffett’s mind.
Lessons From The Tao of Warren Buffett
Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1. The book’s opening lesson is also its thesis: the first job of an investor is not to get rich but to avoid going broke. Losing half your money means needing a hundred percent gain just to get back to even — the arithmetic of loss is brutal, and Buffett’s rules are a reminder to do that arithmetic before every purchase, not after a disaster.
Pay a fair price for a wonderful business. The authors return again and again to Buffett’s preference for great companies over cheap ones: a wonderful business bought at a fair price will usually serve you better than a mediocre business bought at a bargain, because the wonderful business keeps compounding while the bargain keeps needing a reason to be worth more. Quality, in Buffett’s view, is not a luxury — it is the investment.
Stay inside your circle of competence. Buffett’s sayings keep coming back to the same discipline: invest only in businesses you understand, and admit what you do not. The circle is not fixed — it can grow with study — but stepping outside it is gambling, not investing, and most of the book’s warnings about loss trace back to someone buying a business they did not understand.
Temperament beats intellect. The book’s quietest lesson is that successful investing is mostly a matter of character: patience when others are fearful, discipline when others are greedy, and the willingness to sit still while a good business does its work. Buffett’s sayings are short because the lesson is short — the hard part is not understanding it but living it.
Buy The Tao of Warren Buffett on Amazon
Criticisms of the Book
The main weakness of The Tao of Warren Buffett is its format. One hundred twenty-five short entries mean breadth at the expense of depth: each saying gets a page or so, and the interpretations are the authors’, not Buffett’s — a reader who wants Buffett’s own reasoning, in his own words, will need his letters and the biographies. The book tells you what Buffett thinks; it rarely shows you how he got there.
The book is also, by design, a book of sayings rather than a system. It offers no method for valuing a business, no portfolio framework, and no guidance on how much of your money belongs in stocks. Readers who want the method behind the maxims should pair it with Buffettology, the authors’ fuller treatment, or with The Warren Buffett Way for the same ideas organized as an investment approach. For Buffett’s life and the context behind the sayings, The Snowball is the place to go.
Who is This Book For?
This is the book for a Buffett admirer who wants his thinking in the smallest possible dose — a page a day, a saying at a time, kept by the bed or the desk. It pairs naturally with The Intelligent Investor, the book Buffett himself has called by far the best book about investing ever written. Readers who enjoyed it will find this one the most quotable companion to it — the sayings, without the scaffolding.
It is less useful for readers who want to learn value investing from scratch. If you need a valuation method, a portfolio framework, or a step-by-step guide, this book will give you the proverbs and leave the practice to others. Read it to absorb Buffett’s way of thinking, then go to the systematic books to put it to work.
Final Thoughts
The Tao of Warren Buffett has lasted because it respects a simple truth about Buffett: his wisdom fits in a sentence, and the sentence is usually enough. The authors’ interpretations add context without getting in the way, and the book works exactly as designed — read a page, think about it, come back tomorrow. It will not teach you to value a business, but it may keep you from buying one you should not.
Read it before you buy your next stock, and read it again after your next loss — the second time through, Rule No. 1 reads less like a joke and more like a warning. As an introduction to Buffett’s way of thinking, it remains one of the most approachable places to start.
