For those who don’t know who Warren Buffett is, if there are such people left in the world, the book’s first writer, Mary Buffett, introduces it as: “For twelve years, I was the daughter-in-law of Warren Buffett, the world’s most successful investor. and now his biggest philanthropist. ” The purpose of the book is to explain and explore Warren Buffett’s two insights, which are: how to identify an exceptional company with a lasting advantage and how to value a company with such an advantage.
Consequently, Warren Buffett believes that such a company is unique because it sells a unique product or service or is a buyer and seller of a good product that people always need. To do this, he consults the financial statements of companies that survived successfully for many decades through, mostly, common online search engines.
The teaching part of the book comes after chapter six with a close look at the income statement in chapters seven through twenty, followed by the balance sheet through chapters twenty-one through forty-nine, the statement of cash flow through chapters fifty to fifty-two and the last part, Valuing the company with a lasting competitive advantage. It is in this last part where the indications of a true strategy for the selection of values are found. The book ends with an appendix and a glossary for selected terms.
This book can be very useful for those who are just learning to analyze actions. The chapters are short and the details about the companies are few, so as not to confuse a newbie. Still, some interesting examples show how to tell a good deal from a mediocre one, and quotes, charts, and anecdotes instruct the new investor on the types of companies to stay away from, how to determine a long-term investment, and what can cripple. or kill a good deal.
Warren Buffett and the Interpretation of Financial Statements: The Search for the Firm with a Lasting Competitive Advantage is written in straightforward and highly understandable language, and its dimensions make it easy to transport, although it is hardcover at 224 pages. Published by Scribner in October 2008, the book is ISBN-10: 1416573186 and ISBN-13: 978-1416573180.
Book authors Mary Buffett and David Clark have written other books on Buffett’s investment strategies, including The Tao of Warren Buffett, Buffettology, The New Buffettology, and The Buffettology Workbook.
Reading, understanding and interpreting financial statements and investment fundamentals is a must for most beginner to intermediate investors, especially at this time when markets are unsafe and unstable. Many investors buy shares without looking closely at the financial statements of a company to pay dearly for that omission later. Whether you agree with Buffett’s strategies or not, and whether or not that same person approves of the way this text is written, this book is a lucid and practical introduction to making sound investment decisions.