How Warren Buffet Reads Financial Statements, A Review
Warren Buffet and Financial Statements
I just read . Whew….what a mouthful. The authors of this book are Mary Buffet and David Clark who have written 9 other books about Warren Buffet’s stock buying, and portfolio management strategy. Warren Buffet and the Interpretation of Financial Statements, The Search for the Company with a Durable Competitive Advantage
David was trained by Buffet and Mary was Buffet’s daughter in law. Both authors are recognized as top financial experts around the world. Their books on Buffet have sold millions of copies around the world and have been translated into multiple languages.
These two know what they are talking about, but that is enough on the authors. I want to tell you about the book.
A Short and Concise Read
It is an information packed read but it is short. I read it over the course of a couple of hours while taking notes on the strategies being presented. After finishing the book I was surprised at how little time it took to read, but rather than feeling like I was missing information or feeling like it was a sampler for their other books I was excited and ready to go looking for the next stock to add to my portfolio for the long term.
The shortness of this book is described in the title, Interpretation of Financial Statements, and that is really what this book hones in on. It doesn’t waste your time by over explaining every concept it introduces, assuming that readers of this book have some financial knowledge, but it does explain what the items in the financial statement are and what to look for in the numbers.
Overall the book is just the right length for what I was reading it for, a guide to analyzing financial statements. It’s is concise and consistent in its presentation of the information.
Well Written Useful Information
All the information provided can be useful to the reader; I didn’t read a single chapter that didn’t show me something I needed to know, or something I needed to ignore. There are no long rambling explanations about the techniques used, so you get the clearest possible explanation in each chapter.
In the way of the book being written, it truly is a polished piece. Even the chapters that tell you not to worry with this item on a financial statement tell you what it is and that it isn’t important to Buffet. This made me feel like the authors wanted me to have the knowledge of what I was dismissing rather than just glossing over it.
What Could Have Been Better?
Not much, but some of the chapters don’t give you exact ratios to look for, and it confused me as I was looking for an exact ratio like I was given in the previous chapter. These told you to look for higher or lower amounts but nothing concrete. In a book that is very clear this was the only muddling.
So Overall, How's The Book?
This is a great book to read for understanding Financial Statements, and is a handy desk reference to have if you aren’t quite sure if what you’re looking for. A very clear and concise read packed full of information that any serious investor will use every time they analyze a stock’s financial statement.
It left me excited and ready to look for the next addition to may portfolio. It also made me want to read the other books these two experts have written. I believe that the information in this book will help any investor find companies with a durable competitive advantage to add to their portfolio.
All top professional must master the fundamentals of their craft, investors need to master theirs as well and this book contains the fundamentals of the most important aspect of any business, its financial statement.
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A fantastic read for investors who are serious about long term investments.