I have a bachelor’s degree in finance from one of the best state business schools in the country. That’s not to brag - in fact it may be the opposite - because after four years I can’t say I understood the equity market that well. Part of it was my interests outside the classroom often competed and won against my interests inside the classroom, but part of it is that often information presented in the academic environment is just disconnected from the real world in some ways.
I understood that a share meant share of a company and understood the concept of an exchange and stock split and general valuation principles, but not enough to put anything into practice. I didn’t what activist investors did, or where the real pros started when analyzing a company, or how to value one ratio over another.
But some time during my senior year at school I picked up “Buffett: The Making of an American Capitalist” at the recommendation of a friend. It goes through Buffett’s life, as any biography does, and a detailed account of his journey from being a wildly successful newspaper boy to wildly successful multi-billionaire celebrity investor.
I find a spoonful of sugar helps the medicine go down, and hidden in a fascinating story are numerous lessons about analyzing a company’s financials, the powers that can be leveraged by shareholders, and simple advice about investing like buying solid brands and businesses that you understand, and avoiding the rest. Buffett really honed his ability under the teachings of Benjamin Graham to analyze the REAL financial state of companies under the surface of income statements and balance sheets and unlock that value in a way that suited his temperament. You will learn that investing professionally iis more than just understanding numbers. It’s also a study in psychology and, at Buffett and Munger’s level, an exercise in salesmanship.
You will be tempted to go out and become a Benjamin Graham acolyte after reading this book, because Buffett makes it sound downright easy to become a billionaire. Just keep in mind that a) Warren Buffett is much, much smarter than you b) The Intelligent Investor is really boring and c) stock market information availability has changed drastically since his start in the late 50s.
Whatever you think about Warren Buffett it’s a powerful and inspiring read, and my number one recommendation to anyone who wants to learn about stocks, investing, and business but doesn’t know where to start.
Submitted November 25, 2018 at 03:12PM by gslfrancisfrances https://ift.tt/2SeTsNF
