BUFFETOLOGY: The Previously Unexplained Techniques That Have Made Warren Buffett The World's Most Famous Investor [Hardcover]

Mary Buffett (Author), David Clark (Author)

Book Description

Publication Date: November 13, 1997

"Buffettology" is the first book from someone who, thanks to personal and professional access to Warren Buffett, has been uniquely positioned to learn from the master. Mary Buffett had the privilege-- during her twelve years as his daughter-in-law-- of sharing some of this very private genius's informal discussions of his investing philosophy, and now she shares some of her invaluable observations with us.

This breakthrough book offers a full-blown explanation of how Buffett uses "Business Perspective Investing" as a wealth-building tool. His strategy is not so much to "pick stock" but to search for and invest in excellent companies whose intrinsic value and potential earnings he can reasonably predict through a series of steps we learn about throughout the book.

Citing many fascinating case histories and examples, "Buffettology" shows us what kinds of companies Buffett looks for and why, and which he avoids and why. The authors show us the mathematical models and equations Buffett uses to determine the basic value and earnings potential of his final choices (and the right price to pay, for which he is willing to wait). We also learn how with the aid of an inexpensive, widely available handheld calculator, anyone can do similar equations.

In addition to providing such in-depth analysis, this book offers two more firsts. One is a chapter on Buffett's rarely discussed and extremely successful arbitrage operations. The book gives us the arbitrage equation he uses to determine the positions he should take. The other is a comprehensive list and brief analysis of fifty-four companies in which Buffett has invested and the authors believe he continues to follow, many of which have never before been publicly identified as "Buffett companies".

Editorial Reviews

Amazon.com Review

Americans are infatuated with the stock market. The number of households that own stock has increased from around 20 percent in the early 1980s to over 40 percent today. The market offers the hope of quick wealth and early retirement, and just about everyone who is in the market is looking for an edge, from sources such as CNBC and Wall Street Week to the Beardstown Ladies and "The Motley Fool." So it should be no surprise the most successful investor of our time--Warren Buffett--has been the subject of dozens of books and magazine articles. The value of Buffett's company, Berkshire Hathaway, has increased from $18 per share in 1965 to over $70,000 per share today. The interest in Buffett has spawned an approach to investing called "Buffettology," which is the subject of a book by the same name written by Buffett's former daughter-in-law, Mary Buffett.

In Buffettology, Mary Buffett, with the help of David Clark, details Warren Buffett's approach to investing. It's a style of investing based on the work of Benjamin Graham and one that requires a quality that most investors lack--discipline. Mary Buffett writes, "As you read through this book you will come to see that having a business perspective on investing is more about discipline than philosophy.... In short, other people's follies, brought on by fear and greed, will offer you, the investor, the opportunity to take advantage of their mistakes and benefit from the discipline of committing capital to investment only when it makes sense from a business perspective.... You will find that almost everything that relates to business perspective investing is alien to Wall Street folklore.

Buffettology examines Buffett's methods for valuing companies and selecting stocks--it even encourages you to buy a calculator and work through the valuation formulas that Buffett uses when researching companies to buy. The book not only serves as a useful guide to understanding how Buffett invests, it's an excellent primer to investing in stocks, whether you plan to become a Buffettologist or not. Highly recommended. --Harry C. Edwards, Business editor

Review

Stevin Hoover Hoover Capital Management Absolutely the best book ever written on Warren Buffett's investment methods. --investment

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Product Details

• Hardcover: 320 pages
• Publisher: Scribner; 1ST edition (November 13, 1997)
• Language: English
• ISBN-10: 0684837137
• ISBN-13: 978-0684837130
• Product Dimensions: 9.5 x 6.4 x 1.1 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 3.9 out of 5 stars  See all reviews (108 customer reviews)
• Amazon Best Sellers Rank: #173,988 in Books (See Top 100 in Books)
  • #15 in Books > Biographies & Memoirs > People, A-Z > ( B ) > Buffett, Warren

Customer Reviews

Most Helpful Customer Reviews

40 of 41 people found the following review helpful:

3.0 out of 5 stars Both an enjoyable read and a disappointment., January 24, 2006

By 

Real Name - Real Name "Real_Name" (Island of the Unreal) - See all my reviews

This review is from: BUFFETOLOGY: The Previously Unexplained Techniques That Have Made Warren Buffett The World's Most Famous Investor (Hardcover)

This book is a mixed blessing. I have read a stack of investing texts over the last 10 years, and this is the first to introduce the concept of purchasing a stock on the basis of a calculable return, as one would any other investment such as a bond or T-bill. For this alone the book is worth reading.

It's also a very enjoyable read. I couldn 't put it down. However, part of what made it so rivetting was the promise that the author(s) will (1) teach me exactly how Warren determines which companies to buy, and (2) the later chapters would teach me in detail how to value a stock and determine what price to pay for it just as Warren does. Unfortunately, the first promise falls a little short, and the second promise proves to be a flat-out lie.

Problem 1: She tells us the math is so complex that she had to enlist the aid of a second author to help with that part of the book. But the math turns out to be junior high school level stuff. She shows us a couple of way theat one CAN attempt to calculate a reasonable price for a stock, but does NOT show us how Warren does it, nor does she show any current examples of how we can go about to a stock today.

Problem 2: The truth is, she doesn't know how to apply Warren Buffet's techniques, because if she did, she would have included at least one CURRENT example (at the time of printing). She would have chosen a stock and explained why it is a great investment and would have told us what price to pay for it, and would have shown how she made these determinations. After all, that is why we are interested in learning Warren's methods, so we can buy excellent investments TODAY. Merely showing us how much money he made on some stock he bought 20 years ago doesn't prove that she knows HOW he did it. There are a number of companies which she describes as great, but beyond that she drops the ball. Of course, if she had presented a concrete, current application of the method she describes, then she would be forever accountable. We would be able to quantify her success or lack thereof. But she conveniently prevented this.

Problem 3: The book is full of fluff. No doubt she was coached by the publisher to thicken the book. She repeats things over and over. There is even one chapter that literally repeats one paragraph of information a dozen times, which will make your head spin and your jaw drop in dismay. And the further one gets into the book, the more prevalent is the fluff.

Problem 4: She completely overlooks free cash flow, which everyone knows is a key criteria that Mr. Buffet looks at.

Problem 5: She tends to talk down to the reader.

My advice: The book is worth a read, but buy it used, or get the cheapest version available. But don't expect to be able to do what Warren does after reading it.

Cheers!

28 of 29 people found the following review helpful:

4.0 out of 5 stars Better than it seems to some, February 9, 2003

By 

James H. McDuffie (Huntsville, Alabama United States) - See all my reviews
(REAL NAME)   

This review is from: Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett The Worlds (Paperback)

Although I agree with some reviewers about the origin of the book I believe it should be judged by its merits rather than by whether or not Mary Buffett is capitalizing on her relationship with Buffet's son. The book makes a great deal of sense actually and I have made a great deal of money in the stock market using methods almost identical to those espoused in the book.

However, the authors fail to explain why low debt, high return on equity companies are so attractive. They dance around but never hit the correct answer. This makes me wonder if they really understand it. For the reader's future reference, once this simple fact is truly understood the investor is on his or her way to understanding investment. Another difficulty is that there are mathematical errors in the book and simplistic mathematical calculations. But the errors induced thereby are not large and no one seems to realize that the calculations are just a poor man's replacement for calculus. As someone with a extensive mathematical background I find this perfectly acceptable. Quite frankly, I have never needed more than simple algebra to understand investments anyhow so restricting the reader to this is good. Also, some sections of the book wander about somewhat aimlessly trying to explain rather simple concepts. I just think the authors don't have a quantitative background. As I said above that is ok but these concepts can be explained better in words than they are in the book.

Finally, other reviewers are correct. Mary Buffett using Warren said this and Warren said that etc. throughout the book grates after a very few pages.

But in the final analysis the book is worth the time and effort. It is actually an attempt to make a basic valuation theory available to the masses so to speak and it does a very good job of this. The book is definitely worth reading for those just starting out and in particular for those who think they understand investment but really don't. I will leave it to the reader's discernment as to who those individuals are.

43 of 48 people found the following review helpful:

5.0 out of 5 stars Best Investing Book I've Read, October 1, 1999

By A Customer

This review is from: Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett The Worlds (Paperback)

I've read Robert Hagstrom's "The Warren Buffett Portfolio", Ben Graham's "The Intelligent Investor", James O'Shaughnessy's "What Works on Wall Street", and Peter Lynch's "One Up On Wall Street". "Buffettology" is better than all of them combined. It tells you Warren's basic investment strategies AND the mathematics to calculate what is and isn't a good buy. It goes far beyond just P/E ratios and ROE.

Before I bought the book, I wondered if maybe Mary Buffett didn't really know Warren's investment strategies and was just using her name to sell books. I was wrong. She goes into great detail about how he picks stocks. Far more detail than is in Hagstrom's book or in BRK's Annual Reports (but those are good sources too).