The human mind is wired for stories. We think in stories, we translate ideas by using stories, and we prefer to get our information in story form. When it comes to investing, some of the best stories can be found in Warren Buffett’s annual letters to Berkshire Hathaway shareholders. What makes them such a great read is that Buffett uses stories as verbal shortcuts to make sense of complex issues. Here are a few of my favourites.

“Through my favourite comic strip, Li’l Abner, I got a chance during my youth to see the benefits of delayed taxes, though I missed the lesson at the time. Making his readers feel superior, Li’l Abner bungled happily, but moronically, through life in Dogpatch. At one point he became infatuated with a New York temptress, Appassionata Van Climax, but despaired of marrying her because he had only a single silver dollar and she was interested solely in millionaires. Dejected, Abner took his problem to Old Man Mose, the font of all knowledge in Dogpatch. Sa...

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