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How Buffett Does It
Book

How Buffett Does It

24 Simple Investing Strategies From The World's Greatest Value Investor

James Pardoe
McGraw-Hill, 2005

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Editorial Rating

6

Qualities

  • Applicable
  • Well Structured
  • Concrete Examples

Recommendation

This book is a great example of the architectural and design mantra, "form follows function." Its "form" is that of an easy-to-read handbook explaining the basics of value investing. Its "function" is to explain how Warren Buffett, a self-made investor who is now worth about $40 billion, used value investing to make his fortune. Buffett’s premise is that people should base their investing strategies on common sense and search out assets that are selling for less than they are worth. For this, you don’t need esoteric mathematical formulas; all you need are the guidelines that this book clearly enumerates. Although author James Pardoe often merely reiterates what Buffett has said in his own books, Pardoe deserves credit nevertheless for packing his handbook with illuminating examples and stories. getAbstract.com believes this book will be practical for anyone intimidated by investing, overwhelmed by data or vulnerable to pressure from brokers. In his description of value-investing, Pardoe raises a good question: Why does Wall Street dislike it so much? Buffett’s answer: "It’s too simple."

Take-Aways

  • Warren Buffett never inherited any money from his parents, yet he is worth more than $40 billion today.
  • When Buffett was 11 years old, he bought three shares of Cities Service Preferred stock for $38 per share and sold it when it reached $40.
  • The value of some stocks in Buffett’s company, Berkshire Hathaway, has risen from $40 per share in 1974 to $97,000 per share in 2004.

About the Author

James Pardoe is the principal attorney with Pardoe & Associates.

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