How Buffett Does It by James Pardoe

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I wouldn’t call myself knowledgeable on the world of investing. All I’ve got at present is half a year’s experience of putting a little away every month into a tax-efficient index fund that I’m hoping I’ll be able to grow over the next decade to provide me and the missus with a less spartan income in our golden years than the state pension is promising. I’m not interested in taking on crazy risk for quick returns or paying exorbitant fees to financial advisers, so a lot of Buffett’s principles make sense to me, if Pardoe’s summaries of Buffett’s investment strategies are fair.  And those strategies are, as I understand it, 1. Concentrate on the inherent value of companies, not their stock prices per se. 2. Find a couple of low-tech, well-managed firms. 3. Wait until the market goes into one of its periodic fits of depression. 3. Buy loads of stocks of one or two companies. 4. Then hold on to that stock through thick and thin. 5. Favour inactivity over hyperactivity. 6. Don’t diversify as that will dilute the profits you’ll make. 7. Ignore the financial experts’ hype.

It all makes sense, but relies on you to do your homework so that you know what a good company is, that you have the cash to invest in quantities to make a difference, and that you can accurately spot when the market is ripe for manipulating. These are skills I’ve yet to hone, so I’ll stick to my index funds for the present, though this book has intrigued me to try to put a little extra cash aside for the day that I might be in a position to spot and buy some underpriced stock in a good, low-tech company.

The book is good for the investing beginner like me, but for anyone with more knowledge, it’s probably too basic, and the constant refrain “Buffet, the greatest investor ever,” rankled after a while, like an incantation by a devout follower, even if it might be true.

No. 51 of 100 books I intend to read and review in 2019.

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Patrick Sherriff, an Englishman who survived 13 years working for newspapers in the US, UK and Japan. Between teaching English lessons at his conversation school in Abiko, Japan, with his wife, he writes and illustrates textbooks for non-native speakers of English, releases Hana Walker mystery novels, short stories, essays and a monthly newsletter  highlighting good fiction published in English about Japan. Saku’s Random Book Club is his latest project to spend more time with books.