For those who don’t know who Warren Buffett is, if there are any such people left in the world, the first writer of the book, Mary Buffett, introduces it like this: “For twelve years, I was the daughter-in-law of Warren Buffett, the most successful investor in the world. and now its greatest philanthropist.” The purpose of the book is to explain and explore the two insights of Warren Buffett, which are: how to identify an exceptional company with a lasting advantage and how to value a company with that advantage.
Consequently, Warren Buffett believes that such a company is unique because it sells a unique product, or a unique 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 have successfully survived for many decades, mostly through common online search engines.
The teaching portion of the book comes after chapter six with a detailed look at the Income Statement in chapters seven through twenty, followed by the Balance Sheet through chapters twenty-one through forty-nine, The Cash Flow Statement through from chapters fifty to fifty-two, and the last part, Valuation of the Company with a Lasting Competitive Advantage. It is in this last part that one finds the hints of a true stock selection strategy. The book ends with an appendix and a glossary of selected terms.
This book can be very useful for those who are just learning to analyze stocks. 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 the 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 to expect. maim or kill a good business.
Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with Enduring Competitive Advantage is written in straightforward, highly understandable language and is easy to carry at dimensions, yet it is hardcover at 224 pages. Published by Scribner in October 2008, the book has ISBN-10: 1416573186 and ISBN-13: 978-1416573180.
The authors of the book 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 are a must for most beginning and intermediate investors, especially at this time when the markets are uncertain and unstable. Many investors buy shares without taking a good look at a company’s financial statements to pay 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 wise investment decisions.