Most helpful critical review
35 of 44 people found the following review helpful
The average investment book...
on January 14, 2000
Actually, to think that this book will teach you a whole lot about Warren Buffett's investment technique is significantly misleading.
I know many people have found this book more than just fascinating and it's probably bcoz this was the first value investing book they read rather than anything else.
This book, describes the many people who've had success with buying stocks at decent prices (hence, the VALUE investment idea) and how you too, as a reader can do the same. Then the author goes on to talk about Buffett, the billionaire investor who roughly made $8,000 plus out of every $1 invested over a 40-year period.
Now, to take this book as an intro to the technique is fine, but to take it as a "How Buffett did it book" is totally misleading.
You see, Buffett investing is about the margin-of-safety principle (essentially, making the purchase price so good even a bad sale yields satisfactory return), it's about his former lecturer Ben Graham and Mr. Market, it's about the temperament of investors, the attitude towards bear markets (falling markets), it's the pitches, strikes, and when to swing your money bat and most importantly, it's about the patience, rationality and discipline.
It's not just buying cheap. Buffett investing is about value NOT in the sense which the author of this book preaches. It's so much more than that.
I've come to understand Buffett investing as creating the most impressive investment record possible, consistently, over the long-term. To do that, you need to have some idea of how Buffett felt when he's buying and when other investors and the whole stock market is selling. It's about how to minimize your risk of losing money in a stock market crash, by doing this thing he calls "Workouts". And it's not about avoiding technology stocks either, that's a personal thing. Many argue that Buffett's techniques won't get you far these days which I think is a bit of a short-term thinking. Buffett's technique can be applied to technology stocks if you really understand the business. "Remember, what lies under every ticker symbol and stock tape is just an ordinary business!" Now, as a Buffett investor our task is to separate the myths and the facts and then, step on the plate... to swing at the perfect pitch. You don't have to buy them at rock bottom prices, they just have to be selling at a price you think is below it's intrinsic value.
Now, of course, more on intrinsic value if you read Hagstrom's first book, "Buffettology" by Mary Buffett and several other books. From my experience, you really need to read just a few books to be able to invest like Buffett and that the secret to this whole idea lies only in a handful of quotes. I'll leave you with one of my favorites,
"You don't need to know a person's exact weight to tell if she was fat.." -- Ben Graham