Book Brief :: Buffettology by Mary Buffett

I’ve heard several financial experts say if you want to learn how to invest like Warren Buffett, there are two things to read: his annual letter to his shareholders and Buffettology by Mary Buffett, his former daughter-in-law. I’ve written about reading his annual shareholders letters a couple of times. And this year, I finally got around to reading Buffettology. It proved to be a fascinating read, and I’m glad I picked it up. That said, my biggest takeaway from reading it is this: don’t try to invest like Warren Buffett.

If you enjoy watching the stock market and have any interest in company stock, I think you’ll enjoy Buffettology. Mary Buffett offers keen insight into where Warren’s methodology came from and how his strategy differs from his mentors.

For a book about something as complicated as financial theory, Mary does a good job of making it readable, offering small chapters, making it as practical as possible, and repeating important points. She provides a checklist of 10 aspects of a company that would make it the type of company worth investing in (things like brand, consumer monopoly, how the company is financed, and how much is required for operations), before getting into the math to see if it is actually a valuable investment (things like rate of return, growth rate per share, and comparison against other investment opportunities).

She concludes by walking through several case studies. Using the checklist and various formulas, she demonstrates why Buffett selected some companies and not others. There’s also a list of companies that Buffett has invested in. However, since the book was published in 1997, the list is outdated, as several of the companies no longer exist.

Conclusion: highly recommended for anyone interested in investing. And while I don’t plan to try to be Buffett, understanding his parts of his strategy makes watching the market all the more fascinating.