I'm adding a new feature to the Rule #1 blog: reader-submitted book reviews of investing and finance titles that may be of help to new Rule #1 investors.
All Reader Reviews will be filed under the Book Reviews tag, alongside my reviews of investing books and others' reviews of Rule #1.
Lee was kind enough to submit the first two Reader Reviews. (Thanks, Lee!) I'll publish one today, one tomorrow. First, a brief note from him:
WOW! I know you're extremely busy and didn't really expect a response. Thanks a million for reading and responding to my email, and the offer to consider my 4M analysis.
I've spent hours reading the blog and wanted to contribute something. Following are reviews of two books I think your audience would enjoy. I've tried to keep them brief, and relate it back to Rule #1.
Feel free to post, edit, or discard as you see fit.
BEGIN LEE'S REVIEW OF "BUFFETT: THE MAKING OF AN AMERICAN CAPITALIST"
After reading Rule #1 and the blog, I got curious about what else might be helpful (or at least interesting) to read. Here are a couple of suggestions.
[Lee's 2nd suggestion will be published tomorrow.]
I highly recommend "Buffett - The Making of an American Capitalist" by Roger Lowenstein (Random House, 1995, 420 pages), probably available at your local library. This is a fascinating story and a great complement to Phil's book.
One of the first things I realized while reading is something Phil has said many times: "Buffett is really smart, and we're (I'm) not!"
Buffett was an unusual child: exceptionally good with numbers; very interested in money; focused on acquiring wealth from a young age, and very hard working. He read investment books as a kid, and told a neighbor that he would be a millionaire by age 30, adding "It's not that I want money. It's the fun of watching it grow." Buffett is one of those people who would have been successful at whatever he did.
I also got a healthy appreciation for Buffett's work ethic. He worked extremely hard throughout his childhood and saved relentlessly. He started working for others, but quickly moved on to managing his own businesses, from a large paper route to renting out pinball machines. He had saved over $5,000 by the time he graduated from high school.
Buffett was frustrated with College, feeling that he wasn't learning anything. He graduated in 3 years, but was turned down by the Harvard business school. This lead him to Columbia and his lifelong friendship with Benjamin Graham. Many aspects of this part of "Buffett" will be familiar to you because of Rule #1 - things like "Mr. Market", "focusing on buying a business not a stock", "margin of safety", etc.
After working for a few years on Wall Street, Buffett returns to Omaha and begins investing other people's money. The book explains how Buffett modified Graham's ideas and grew his initial $10,000 savings into millions and then billions.
Two things struck me. First, there were far fewer publicly traded companies back then, and Buffett was familiar with virtually every one. And second, he was supremely confident, analytical, and unemotional about investing.
My conclusion from reading this book is that while Buffett's techniques work for him (because he is a unique guy), Phil's approach can work for you, me, or anyone.
- Lee R.
Rule #1 posts mentioning Warren Buffett:
- For Bill Ruane - Is Rule #1 Investing Value Investing? - Allocating Your Investment Funds - Will You Be Able to Retire?
Be sure to check back tomorrow for Lee's 2nd book review, of "Beating the Street" by Peter Lynch.