How Buffett Does It – book review (24 simple investing strategies from the world’s greater value investor)

This best selling book “How Buffett Does It” was written by James Pardoe in 2005. Which explains in very simple ideas how he became the world’s greatest investor.

The book examines how Buffett’s record paints picture of his clear beliefs and principles that he implements when making investments.

By following this action packed guide you can follow his examples.

Whereby you will be able to:

  • Learn to Seize opportunities created by stock market folly.
  • Avoid over diversification, and instead invest in enduring companies with predictable business models.
  • Embrace bear markets, take advantage of buying opportunities when everyone else is selling.
  • Invest in old boring companies, that have been around for 50 years, they will still be here in another 50 years.
  • Always search for value and invest in businesses with excellent management.
  • Keep your emotions intact when investing

Amazon link to buy the book: https://amzn.to/434De0Q

So what are the contents within the book ?

The Warren Buffett Way (4 pages)

Chapter 1: Choose simplicity over complexity (5 pages)

Chapter 2: Make your own Investment Decisions (5 pages)

Chapter 3: Maintain Proper Temperament (5 pages)

Chapter 4: Be patient (7 pages)

Chapter 5: Buy Businesses, not stocks (7 pages)

Chapter 6: Look for a company that is a franchise (5 pages)

Chapter 7: Buy low-tech, not high -tech (5 pages)

Chapter 8: Concentrate your stock investments (5 pages)

 Chapter 9: Practice Inactivity, Not hyperactivity (5 pages)

Chapter 10: Don’t look at the ticker price (5 pages)

Chapter 11: View market downturns as buying opportunities (5 pages)

Chapter 12: Don’t swing at very pitch (5 pages)

Chapter 13; Ignore the macro, focus on the micro (5 pages)

Chapter 14: Take a close look at management (7 pages)

Chapter 15: Remember, the emperor wears no clothes on Wall Street (5 pages)

Chapter 16: Practice Independent thinking (5 pages)

Chapter 17: Stay within your circle of competence (5 pages)

Chapter 18: Ignore stock market forecasts (5 pages)

Chapter 19: Understand “Mr Market” and the “margin of safety” ( 7 pages)

Chapter 20: Be fearful when others are greedy (5 pages)

Chapter 21: Read, read some more, then think (5 pages)

Chapter 22: Use all your horsepower (5 pages)

Chapter 23: Avoid the costly mistakes of other (5 pages)

Chapter 24: Become a sound investor (9 page)

Amazon link to buy the book: https://amzn.to/434De0Q

 

 

Summaries of each chapter !

Intro: The Warren Buffett Way: learn to find a great business with great management. Buy them shares at a sensible price and hold on to them for dear life.

  1. Choose Simplicity over Complexity: When investing learn to keep it simple and obvious, don’t try and over complicate matters.
  2. Make your own investment decisions: Don’t listen to brokers, or analysts or pundits. Figure it out for yourself and be responsible your own actions.
  3. Maintain Proper temperament:  Let others overreact to the market noise, learn to keep your head and you will benefit.
  4. Be Patient: Think 10 years rather than 10 minutes. If your not prepared to hold a stock for a decade then don’t buy.
  5. Buy Businesses, Not stocks: Once you get into the right business, you can then switch off and don’t worry about the market in general.
  6. Look for a company, that is a franchise: They have deep walls and moats around them, Which are more or less unassailable.
  7. Buy low-tech, not high-tech: It’s lees often about rockets and lasers, than mainstay things such as bricks, paint, everyday needs.
  8. Concentrate your number of investments: It’s better to have a smaller bunch of stocks with more money in each of them.
  9. Practice Inactivity, Not hyperactivity: There are times when doing nothing is a sure sign to investing brilliance.
  10. Don’t look at the ticker price: Tickers are all about short term noise, investing is more about long term prices.
  11. View market downturns as buying opportunities: See them as buying opportunities and avoid the herd mentality.
  12. Don’t swing at every pitch: You don’t have to buy every stock, buy quality select stocks,
  13. Ignore the macro, focus on the micro: It’s the little things that counts be business-specific.
  14. Take a close look at management: Ask yourself who’s in charge here ?
  15. Remember the emperor wears no clothes on Wall Street: Wall Street is the only place where people in Rolls Royces get advice from normal people in the street.
  16. Practice Independent Thinking: learn to think independently for yourself.
  17. Stay with your circle of competence: Develop an area of expertise, operate within the zone and don’t stray outside of it.
  18. Ignore Stock market forecasters: They will tell you more about the past than the future.
  19. Understand “Mr Market” and the “margin of safety“: Ignore the daily wild swings in the market, avoid short term market sentiment.
  20. Be greedy when other are fearful, and greedy when others are fearful: You can predict that people will be greedy, foolish. You just can’t predict who and in what order.
  21. Read, read some more then think: Don’t rush into any decision take your time and do your own research.
  22. Use all your horsepower: Put your engine to work and build momentum, act smart.
  23. Avoid the costly mistakes of others: Learn form other people’s mistakes and act accordingly, and learn form them.
  24. Become a sound investor: Learn form the above principles in previous chapters.

Overall the book “How Buffett Does It” is very simple to read for an investor. Whether they are a complete novice or a seasoned individual.

The chapters are very short in length, but cover some simple fundamental points. The chapter s are broken down into simple sections with key bullet points highlighted within the text.

It avoids the use of financial jargon, and doesn’t include any confusing graphs or charts.

The aim seems to be to reiterate some key points and ideas that anybody can use. With the premise that if you get the basics and fundamentals of investing in place, their is no reason why anybody can not become a successful investor over time if you follow this plan.

Remember !

If you like this book summary of “How Buffett Does It“, follow the links on https://moneyminted.co.uk to cover other investing books that I recommend reading. To hopefully improve your investing knowledge, so you too can reach your financial goals and aims.

It’s not a get rich quick journey, but you can get there in the end if you create an action plan and think long term.

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