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The Tao of Warren Buffett by Mary Buffett and David Clark is a fun read that can be finished in about an hour and a half. Mary Buffett, as the name may reveal, was Warren’s daughter-in-law for over 12 years. She and Clark also wrote the more meaty Buffettology series, which attempts to break down the world’s most successful investor’s strategy and thinking.

Tao is a lightweight book that takes 125 of Warren’s quotes and aphormisms, and attempts to explain their assumed meaning in practical terms. The book breaks these quotes into 14 categories to which they apply. Some categories are “Getting and Staying Rich”, “Why Not to Diversify”, and “Beware the Folly of Greed”. Overall, I thought the explanations were insightful, even though many of the quotes have obvious meaning. More obtuse quotes get more paragraphs of explanation, and the fairly straightforward ones are only lightly expanded upon.

But the real value of this book is not in the explanations, it’s in the collection of quotes. Obviously, several of Buffett’s oft-repeated sayings are in the book: “Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1″. “We enjoy the process far more than the proceeds, though I have learned to live with those also”. Many of the quotes are insights into Buffett’s recognized strategy of making a few big bets on predictable businesses at low prices, and holding virtually forever. Several other themes of Buffett’s thinking can be extracted from these quotes as well. Warren ridicules the Wall Street culture and several quotes expose the folly of trusting your investments to a paid advisor. He recognizes that short term prospects drive current stock prices but that long term business values drive future stock prices. There are also some useful things to remember about business. Warren warns that up-market brands should never go down market to gain sales, that weak management is reflected in weak accounting, and so on.

In summary, there is nothing particularly revealing about Buffett that hasn’t been said a hundred times before. But there are likely to be a couple dozens of quotes that will make you smile and think for a minute. It’s cheap and a quick read, and highly recommended for all investors as food for thought. A couple of my favorites below:

“There is a huge difference between the business that grows and requires a lot of capital to do so and the business that grows and doesn’t require capital.”

A core tenant of the Magic Formula Investing strategy.

“I’d be a bum on the street with a tin cup if the markets were efficient.”

For anyone who believes in the Efficient Market Theory and insists on indexing to the stock market, here is fuel to consider picking some individual value stocks.

The Richest Man in Babylon by George S. Clason was one of the first books I read on the subject of wealth. I was fascinated by the storyteller’s simple principles to acquire wealth and riches and I thought, “This is too easy”. Yet, all those years ago with the knowledge held within the pages of this simple book, I did not take heed. It would be many years before I understood what the story had foretold and I, like many others, would learn the hard way about building a relationship with money.

With our economy in a state of influx and our country’s future uncertain, it would be prudent to teach our younger generations the importance of establishing a strong relationship with money. So many books have been written on the subject of money management and yet 8 out of 10 households have credit card debt in excess of $10,000. Why haven’t we learned the simple rules of building wealth? Where did we miss the mark? Lack of discipline and respect for money has caused much of this country’s default status. A small portion of blame can be placed upon the educational system. That’s right…the curriculum is not inclusive of finance and money management. Our children are learning how to count, but not how to spend. Parents should be more proactive in teaching their children about the realities that lay ahead in the real world concerning money.

The lessons are simple; the action is difficult for those who have never systematically implemented a plan. However, with commitment and a goal bigger than your immediate wants, you will achieve your financial goals with ease. The following is a rudimentary outline of the seven prosperity principles as this author has interpreted them from the famous book:

Principle 1 – Pay You First

Principle 2 – Create a Spending Plan

Principle 3 – Make Your Money Multiply

Principle 4 – Avoid “Get Rich Quick” Schemes

Principle 5 – Own Your Own Home

Principle 6 – Insure Your Future

Principle 7 – Increase Your Ability to Earn

The old cliché “it’s not how much money you have, it’s what you do with it that counts” is true and there aren’t enough of us doing what we should with our money. The downside to this is we are in a race against time, never knowing when we will run out. Each of the seven principles outlined here gives you the foundation for establishing a financially secure future. You can choose not to be a statistic of the working poor, or worse, never reaching retirement age. Start right where you are; it’s never too late.

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 him as, “For twelve years, I was the daughter-in-law of Warren Buffett, the world’s most successful investor and now its greatest philanthropist.” The purpose of the book is to explain and explore the two revelations of Warren Buffett, which are: how to identify an exceptional company with lasting advantage and how to value a company with such advantage.

Accordingly, Warren Buffett believes such a company is unique for it sells a unique product, or a unique service or it is a buyer and seller of a good product that people always need. For 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 to forty-nine, The Cash Flow Statement through chapters fifty to fifty-two, and the last part, Valuing the Company with a Durable Competitive Advantage. It is in this last part that one finds the hints of a true strategy for stock selection. The book ends with an appendix and a glossary for select terms.

This book can be very useful for those who are just learning how to analyze stocks. Chapters are short and the details on the companies are few, to not confuse a novice. Still, a few interesting examples show how to differentiate a good business from a mediocre one, and the quotes, charts, and anecdotes instruct the new investor about the kinds of companies to stay away from, how to determine a long-term investment, and what can maim or kill a good business.

Warren Buffett and the Interpretation of Financial Statements : The Search for the Company with a Durable Competitive Advantage is written in a direct and very understandable language, and its dimensions make it easy to carry, although it is in hardcover with 224 pages. Published by Scribner in October 2008, the book is with 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 such as 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 beginner-to-intermediate investors, especially at this time when markets are insecure and unstable. Many investors buy stocks without taking a good look at a company’s financial statements to pay dearly for that omission later on. Whether one agrees with Buffett’s strategies or not and whether that same person approves the way this text is written or not, this book is a lucid and practical introduction to making wise investment decisions.

The Tao of Warren Buffett by Mary Buffett and David Clark is a fun read that can be finished in about an hour and a half. Mary Buffett, as the name may reveal, was Warren’s daughter-in-law for over 12 years. She and Clark also wrote the more meaty Buffettology series, which attempts to break down the world’s most successful investor’s strategy and thinking.

Tao is a lightweight book that takes 125 of Warren’s quotes and aphormisms, and attempts to explain their assumed meaning in practical terms. The book breaks these quotes into 14 categories to which they apply. Some categories are “Getting and Staying Rich”, “Why Not to Diversify”, and “Beware the Folly of Greed”. Overall, I thought the explanations were insightful, even though many of the quotes have obvious meaning. More obtuse quotes get more paragraphs of explanation, and the fairly straightforward ones are only lightly expanded upon.

But the real value of this book is not in the explanations, it’s in the collection of quotes. Obviously, several of Buffett’s oft-repeated sayings are in the book: “Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1″. “We enjoy the process far more than the proceeds, though I have learned to live with those also”. Many of the quotes are insights into Buffett’s recognized strategy of making a few big bets on predictable businesses at low prices, and holding virtually forever. Several other themes of Buffett’s thinking can be extracted from these quotes as well. Warren ridicules the Wall Street culture and several quotes expose the folly of trusting your investments to a paid advisor. He recognizes that short term prospects drive current stock prices but that long term business values drive future stock prices. There are also some useful things to remember about business. Warren warns that up-market brands should never go down market to gain sales, that weak management is reflected in weak accounting, and so on.

In summary, there is nothing particularly revealing about Buffett that hasn’t been said a hundred times before. But there are likely to be a couple dozens of quotes that will make you smile and think for a minute. It’s cheap and a quick read, and highly recommended for all investors as food for thought. A couple of my favorites below:

“There is a huge difference between the business that grows and requires a lot of capital to do so and the business that grows and doesn’t require capital.”

A core tenant of the Magic Formula Investing strategy.

“I’d be a bum on the street with a tin cup if the markets were efficient.”

For anyone who believes in the Efficient Market Theory and insists on indexing to the stock market, here is fuel to consider picking some individual value stocks.

The Richest Man in Babylon by George S. Clason was one of the first books I read on the subject of wealth. I was fascinated by the storyteller’s simple principles to acquire wealth and riches and I thought, “This is too easy”. Yet, all those years ago with the knowledge held within the pages of this simple book, I did not take heed. It would be many years before I understood what the story had foretold and I, like many others, would learn the hard way about building a relationship with money.

With our economy in a state of influx and our country’s future uncertain, it would be prudent to teach our younger generations the importance of establishing a strong relationship with money. So many books have been written on the subject of money management and yet 8 out of 10 households have credit card debt in excess of $10,000. Why haven’t we learned the simple rules of building wealth? Where did we miss the mark? Lack of discipline and respect for money has caused much of this country’s default status. A small portion of blame can be placed upon the educational system. That’s right…the curriculum is not inclusive of finance and money management. Our children are learning how to count, but not how to spend. Parents should be more proactive in teaching their children about the realities that lay ahead in the real world concerning money.

The lessons are simple; the action is difficult for those who have never systematically implemented a plan. However, with commitment and a goal bigger than your immediate wants, you will achieve your financial goals with ease. The following is a rudimentary outline of the seven prosperity principles as this author has interpreted them from the famous book:

Principle 1 – Pay You First

Principle 2 – Create a Spending Plan

Principle 3 – Make Your Money Multiply

Principle 4 – Avoid “Get Rich Quick” Schemes

Principle 5 – Own Your Own Home

Principle 6 – Insure Your Future

Principle 7 – Increase Your Ability to Earn

The old cliché “it’s not how much money you have, it’s what you do with it that counts” is true and there aren’t enough of us doing what we should with our money. The downside to this is we are in a race against time, never knowing when we will run out. Each of the seven principles outlined here gives you the foundation for establishing a financially secure future. You can choose not to be a statistic of the working poor, or worse, never reaching retirement age. Start right where you are; it’s never too late.

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