Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett The Worlds (Paperback)

~ Mary Buffett (Author), David Clark (Author) "This book is not another cut-and-paste of Warren Buffett's letters to Berkshire Hathaway shareholders, nor is it a biography filled with anecdotes about Buffett..." (more)
Key Phrases: business perspective investing, share equity value, annual compounding rate, Wall Street, Value Line, Capital Cities (more...)

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 --This text refers to the Hardcover edition.

Review

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

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Product Details

• Paperback: 320 pages
• Publisher: Scribner; 1st Fireside Ed edition (June 8, 1999)
• Language: English
• ISBN-10: 068484821X
• ISBN-13: 978-0684848211
• Product Dimensions: 8.4 x 5.5 x 0.9 inches
• Shipping Weight: 9.6 ounces (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (105 customer reviews)
• Amazon.com Sales Rank: #44,424 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

40 of 43 people found the following review helpful:

4.0 out of 5 stars Ex-Buffett on Buffett, January 15, 2004

By	Thomas Mongle (Houston) - See all my reviews (REAL NAME)

Probably the best of the Buffett books. Mary isn't part of the Buffett gang anymore, so she doesn't have anything to protect, just plenty to tell.
Mary Buffett and David Clark spell out Buffett's methodology as well as anybody. But once you get into the meat of the book, you realize that Buffett had (and has) a lot of advantages over most other investors. That, in and of itself, doesn't take away from the genius behind the method, just that you aren't going to approximate his returns without a lot of luck.
Particularly interesting is that many of his "great" purchases were made either when the market had momentarily beaten down a good company, or when the market in general was on the ropes. Both situations recall the sage advice to "buy when blood is running in the streets." Sadly, most investors are usually loaded up with stocks (and paper losses) and without the wherewithal to buy more when these panics hit.
That's where Buffett's business strategy comes in. By investing heavily in insurance companies early and often, he's the beneficiary of a steady stream of cash, ready to be put to use whenever the opportunity presents itself.
The authors' advice to mimic Buffett in seeking out consumer "monopolies" with intangible assets is good; "an unregulated monopoly that the world hasn't recognized yet," as they say. However, thousands of Wall Street's brightest are hard at work all day and into the night looking for those same jewels. So you'll have plenty of competition.

Two problems arise from this type of book. The first is that the assumptions made about the expected growth of earnings/dividends over the course of the next 10 years can easily go astray. The business environment is changing rapidly. Long-range predictions haven't held up well recently (and frequently don't). The second problem is one of practicality. Do you actually have the resources and time to do the footwork that a Buffett or a Peter Lynch can do? If so, then maybe you'll be the next superstar. Otherwise, you'll have to find an easier way of going after that 20+% return year after year.

23 of 24 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)

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.

39 of 44 people found the following review helpful:

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

By A Customer

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).