In the world of investing, the name Warren Buffett is synonymous with success and prosperity. Building from the ground up, Buffett chose wisely and picked his stocks with care, in turn amassing the huge fortune for which he is now famous. Mary Buffett, former daughter-in-law of this legendary financial genius and a successful businesswoman in her own right, has teamed up with noted Buffettologist David Clark to create Buffettology, a one-of-a-kind investment guide that explains the winning strategies of the master.
* Learn how to approach investing the way Buffett does, based on the authors’ firsthand knowledge of the secrets that have made Buffett the world’s second wealthiest man
* Use Buffett’s proven method of investing in stocks that will continue to grow over time
* Master the straightforward mathematical equipments that assist Buffett in making investments
* Examine the kinds of companies that capture Buffett’s interest, and learn how you can use this information to make your own investment choices of the future
Complete with profiles of fifty-four “Buffett companies” — companies in which Buffett has invested and which the authors believe he continues to follow — Buffettology can show any investor, from beginner to savvy pro, how to create a profitable portfolio.
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This book is a “most of what you need to know about value investing but didn’t know what to ask” approach to the investment philosophy of Warren Buffett. I also own the first book, but didn’t review it. This one is much better.
The New Buffettology is a book of examples. I think that’s what I like most about it. It has plenty of theory about the importance of a company having a durable competitive advantage, honest and able management, staying within a circle of competence, ensuring a margin of safety exists, how interest rates affect stock prices, and more. That’s great, but the rubber hits the road with the numerous case studies of actual Buffett investments and how he applied the above concepts to help him decide to invest in Coca Cola, Gillette, the Washington Post, and Geico, to name a few.
Along with the case studies come the formulas. Lots and lots of formulas. Does the company have strong earnings with an upward trend? Plug 10 years worth of earnings into your spreadsheet and calculate the annual earnings growth rate. Does the company return an above average Return-On-Equity? Mary Buffett & David Clark show you how to break out those Value Line reports and plug in 10 years worth of ROE numbers into your spreadsheet to calculate the average annual return on shareholders equity for the last decade. What’s the stock’s value relative to a Treasury bond? You’ll learn how to calculate the answer here.
The exercises go on case study after case study. I love it. Roll up your sleeves; dust off your BA-35 solar calculator and get ready to rock. If you want the skinny on value investing ala Buffett style, you had better be prepared to get your hands dirty because this is a thinking investor’s book.
This book doesn’t just TALK about financial analysis. It shows you how to DO it. Nothing is more boring than long windy theories with no “meat” to back them up. This book serves up the meat in Texas sized portions. Exactly where does one go for 10 years of financial information? Where do you find the current government bond rate? What’s important in an annual report? Just how do you find companies that make products with a durable competitive advantage? What should you read? What should you watch? What habits should you develop? How do smart investors use “scuttlebutt” to help them form an opinion about a company? The answers may surprise you.
If value investing is what you want to do, then you have much to learn. And indeed, this book is a great place to start. It’s not the only value investing book you should ever read, but is should definitely be one of the first.