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How Buffett Does It: 24 Simple Investing Strategies from the World's Greatest Value Investor (Mighty Managers Series)

How Buffett Does It: 24 Simple Investing Strategies from the World's Greatest Value Investor (Mighty Managers Series)
Author: James Pardoe
ISBN 13: 9780071449120
ISBN 10: 71449124
Edition: 1
Publisher: McGraw-Hill Education
Publication Date: 2005-07-18
Format: Hardcover
Pages: 176
List Price: $21.00

Warren Buffett’s straightforward rules for long-term success

One thousand dollars invested in Warren Buffett’s Berkshire Hathaway stock in 1965 would be worth roughly $5 million today! This astonishing success didn’t come through Buffett’s use of high-tech computer trading models, or intricate market timing systems. Instead, it came through his stubborn adherence to the time-honored fundamentals of value investing.

How Buffett Does It is a step-by-step guidebook for investing like Buffett in any market environment. This value investing primer presents and expands on 24 primary ideas Buffett has followed from day one that include:

* Choose simplicity over complexity
• Make your own investment decisions
• Be patient
• View stocks as businesses not pieces of paper
• Practice inactivity, not hyperactivity
• View downturns as buying opportunities
• Practice independent thinking
• Ignore stock market forecasts
• Be fearful when other are greedy, and greedy when others are fearful
• Avoid the costly mistakes of others

Warren Buffett still lives in the house he bought three decades ago, still drives his comfortable Lincoln Town Car, and still holds to the sound and simple value investing style that helped him become one of the world’s wealthiest individuals. How Buffett Does It explains, in Buffett’s words as well as those who know him best, what you can do to achieve Buffett-like results in your own portfolio.

Warren Buffett’s legendary patience and single-mindedness have helped him become one of the world’s greatest investors, with a $40 billion fortune built solely on his market prowess. But what signs does he see that others miss? And more important, what can you do to follow Warren Buffett’s path to financial and investment success?

How Buffett Does It examines the Buffett record and paints a surprisingly clear picture of the beliefs and principles that make up that record. Drawing from literally hundreds of Buffett quotes and maxims, this value-packed investors’ guide will show you how to follow Buffett’s example to:

  • Seize opportunities when presented by stock market folly
  • Avoid diversification, instead investing in a few enduring companies with predictable business models
  • Embrace bear markets, taking advantage of the opportunity they provide to “buy when everyone else is selling”
  • Think for yourself, avoiding the majority of analysts and investors think too much, trade too often, and listen to the wrong people
  • Look to invest in great businesses with great management
  • Beware of hidden costs, meaning everything from commissions on active stock trading to high mutual fund fees
  • Invest in “old economy” businesses, boring companies that have been around for fifty years and will probably survive the next fifty
  • Always search for value, and learn the keys to distinguishing a temporary setback from a fatal flaw
  • Keep your head at all times, recognizing that acting on emotion can kill a stock market portfolio

Virtually every Buffett principle came into play during the Internet stock bull market. Between mid-1998 and early-2000, as cautious veterans like Buffett were laughed at for missing the boat, Berkshire-Hathaway shares lost more than half of their value. Still, Buffett refused to buy Internet stocks, quietly counseling patience, prudence, and long-term value.

When the dust cleared, Buffett was right. Again.

Warren Buffett believes that successful investing requires little more than quality research, common sense, and patience. How Buffett Does It shows you how to follow his lead, and build a portfolio that is solid, easy to understand, and designed to provide you with tremendous long-term returns without the short-term headaches.

James Pardoe (Los Angeles, CA) is the principal attorney with Pardoe & Associates and one of today’s most knowledgeable followers of Warren Buffett. He received his JD from Pepperdine University.