Customer Reviews

The Buffettology Workbook: Value Investing The Warren Buffett Way

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2 star:		(1)
1 star:		(4)

 

 

...like me. I know that this is just basically a rewrite of the original "Buffettology" with updated numbers, but I thoroughly enjoyed it. The book is even broken up like the original, with a descriptive first section and a math oriented second section. I would have like to see more company examples in the second section and a smaller descriptive section, though.

If you have the original "Buffettology" there's really not a lot new here, so it could be an alternative for someone who has not been exposed to the original.

Written by Mary Buffett, former daughter-in-law of Warren Buffett, and David Clark, a portfolio manager, "The Buffettology Workbook" is the best investment I've ever made. The financial formulas you'll find in this book are all the ones they should teach in business school, but don't.

The book is broken down into 23 chapters, each no more than a few pages, so you can read a chapter a day (and continue to review the chapters for the rest of your investing career). The first seven chapters give a breakdown of Warren's investment philosophy, value investing. Here, you learn about the short-sightedness of the market and the bad news phenomenon. Also, the authors identify the difference between commodity-type businesses and consumer monopolies, and tell you why it's far better to own consumer monopolies. Once you understand these concepts, you're halfway toward success as an investor. Now, you need to learn how to identify the correct buying opportunity. That's where the true value of this book comes into play, offering formulas and equations you won't find most books.

The remaining chapters in the book focus on the examination of financial statements, the acquisition of pertinent information (what's important and what's not), then they tell you how determine an investment's desirability. You'll learn the value of high rates of return on shareholder equity, how to measure management's ability to utilize retained earnings, and Warren's ideas for the Internet and short-term arbitrage commitments.

I read this book beginning to end the day I got it, but I'll continue to familiarize myself with its formulas for the rest of my investing career. Although it marks only the beginning of one's investment knowledge, learning these bedrock principles are what separate successful investors from mere average ones... Buy this book!

Britt Gillette
Author of "Conquest of Paradise: An End-Times Nano-Thriller"

This is a good book and it is an even better book if it is used with their other book entitled The New Buffettology - which is better than the first edition entitled just Buffettology. In regard to the reader from TX Buffett uses growth of book value to determine the relative performance of Berkshire Hathaway - just check out the annual report. And Buffett is on record saying that a company is worth its future income stream discounted to present value - though Charlie Munger and I have never seen him do it. This was brought up at the 2001 Berkshire annual meeting. As far Ben Graham is concern Buffett and Munger are both on record saying that they no longer use the Graham's method - still worth the read though. Tim Vick, who wrote "Wall Street on Sale", loves the Buffettology series so much he wrote the cover recommendation. Check it out! And get on the program! You won't be sorry you did!!!

Mary Buffett's second book on her former father-in-law's investment techniques is a big disappointment. Most of the chapters in this second books are a complete re-write of her first offering.

Each chapter ends with a few rather simplistic questions, and a review of each chapter "key points". Many if not all of the same mistakes - both financial and grammatical are repeated in this second book.

Unlike her first book - Buffettology - Mary Buffett does include a few case studies at the end of the book as they relate to actual stock purchases by Warren Buffett.

Beginner and serious devotees of Warren Buffett's investment style are better served with her first book, or better still by reading Warren Buffett's letters to shareholders or any of the other fine books on the same subject matter. Investors can skip this workbook.

For those of you that are time-pressed, this is the best book in the Buffettology Series to read in order to glean a few secrets on the investment techniques of the Oracle of Omaha. The workbook covers both the qualitative and quantitative sides of Buffett's value investing approach, and provides the basic techniques one can implement in order to invest with a reasonable amount of success.

The workbook is not exactly the best book on investing that I have read (that title goes to Benjamin Graham's The Intelligent Investor), but in its defense, it does provide a simple to implement investment strategy. Most of the techniques hinge on a few simple ratios and knowledge of simple present and future worth. Additionally, most of the limitations associated with the techniques are clearly and simply stated.

The book has several merits. The chief merit of the book is that its approach to investing is self-contained, and emphasizes the qualitative aspects more than the quantitative aspects. In passing, readers that focus more on Part One of the book and skip Part Two, the quantitative part, could easily obtain a dramatic improvement in their investment results. Written in simple, easy to understand language, the target audience of this book is most likely that individual who depends on the Internet for all of her information on companies, as such sites as Yahoo, MSN and Value Line are routinely cited in the text as sources of information. The book is very well organized, quite possibly with the idea that it would fit the mold of a chapter-a-day format. Most chapters are usually no more than five pages long, with easy, cheesy word problems and true/false questions at the end of most every chapter to reinforce key concepts. The title of each chapter basically states the key concept to be learned, and key points are highlighted at the end of each chapter. Although it provides some theory and rationale for the techniques it attempts to teach, this is kept to a minimum, and the book focuses almost exclusively on application of the techniques. Those readers that are only interested in the methodology can simply skip to the 22nd Chapter titled 'Doing It Yourself: Buffettology Worksheet'. Thus, the book makes every effort to make learning, and ultimately using, the techniques as painless as possible.

The major demerit of this book rests in its insistence on doing all calculations on a per-share basis. But then, this is how much of the information that is easily obtainable through such channels as Value Line and other sources is presented. One minor demerit is that the authors do not seem to be aware of the virtual ubiquity of MS Office, making it possible to perform all of the calculations in the book in one Excel spreadsheet, but then again, this is a minor demerit. Although there were a number of minor typographical and mathematical errors in the book, I am willing to overlook this, as the thinking and reasoning behind any investment proposition is more important, and is clearly presented throughout the book.

Overall, I rate the book to be worthy of reading. It presents a simple and straightforward investment approach, and does not require an advanced degree in rocket science to implement it. All it really requires is a basic understanding of fractions, decimals and percents, and most important, a willingness to think and reason through the investment proposition. However, those of you with strong quantitative backgrounds will be very dismayed with this book (as I was initially), but as I said before, if you focus exclusively on Part One of the book and Chapter 22, then you will see a dramatic improvement in your investment results going forward.

This is a great book if you are really into Warren Buffett. If you aren't try one of the easier books. It is designed to walk you step by step through how to identify a Buffett type investment. It has a work sheet in it that I've made a standard in my investment program. It's already making me money. Your money is well spent here.

Many books have been written about Warren Buffet's way of picking the right stocks at the right time, but the books of Mary Buffett and David Clark are the most sound, concise and actionable. There is another book by different author (by Robert G. Hagstrom) similar to Mary Buffett's writings: "The Warren Buffet Way", but it misses the important topics laid out in the Mary Buffett's publications. These major topics are: what are the differences between a "consumer monopoly" and a "commodity"; how to calculate the rate of return over a long period of time before choosing the investment; and so on. There is another great book about Warren Buffet and his investment strategy - "Buffet: The Making of an American Capitalist" by Roger Lowenstein, but it better describes Warren Buffet's biography and his relations with family, friends and the society, rather than how did he evaluate the companies. But please note that "Buffettology" is not a replacement of the book by Roger Lowenstein, I highly recommend reading both of them. What is you can omit is the book by Robert G. Hagstrom, above mentioned.

I would recommend an abridged audio version of the Mary Buffett's work, instead of the printed book. The audio version discloses the most important factors of Warren Buffet's investment principles pretty well. Some of the background information is available on free letters to shareholders and Warren Buffet's lectures, but you might not want to crawl thought all these; you might want to save time and just listen or read the Mary Buffett's work, where all this information is perfectly summarized and laid out in a consistent way.

The beauty of the book is it is small, language is simple to understand and you will never feel boared.
Though I would recommend this book for beginner level investors who want to introduce themselves with the stock analyst career.

Thanks
Sunny

The Buffettology Workbook provides a basic foundation in Warren Buffet's approach to value investing. The Oracle of Omaha did not contribute directly to this work, but one of the author's was married to Buffet's son for a time. The work is interesting in two respects. It does provide some detailed examples of the analyses that Buffet uses to help him sort winning stocks from losers. And there are several entertaining examples of companies that the book suggests are "winners" for all eternity that we now know are losers. This confirms the suspicion that all the mathematical analysis is beside the point and that Warren has some deeper insight into the value of long term investments that cannot be captured by routine math. An interesting read for value investors who want to test their approach against the master.

The equities in here are a bit dated, however, it is great practice taught by one of the best. A complement to the intelligent investor.