Why People Should Read The 7-Secrets to Investing like Warren Buffett?
1) The 7-Secrets to Investing like Warren Buffett teaches you how to read and understand a company’s financial statements which not a lot of investors do
2) The 7-Secrets to Investing like Warren Buffett looks at stocks the way Warren Buffett does. Warren Buffett is one of the richest people in the world and this book provides a glimpse into how he invests.
More importantly, you wouldn’t give a stranger thousands of dollars without knowing what they plan to do with it. Investing is the exact same way. You wouldn’t invest thousands in stock without knowing what their plans and financials are.
The Authors Behind The 7-Secrets to Investing like Warren Buffett
The two authors behind this book are Mary Buffett and Sean Seah. Both are investment gurus in their own right. Mary Buffett was a former daughter-in-law to Warren Buffett’s son, Peter Buffett. During those years she picked up a lot of information on investing. This has led to launching the Sandord Deland UK Buffettology fund and starting the Buffett Online School. She also taught business and finance at UCLA and other universities across California State. Sean Seah is an investor and author of 3 investment books. He started Value Investing College and is a frequent speaker in the investment world in Singapore.
The 7-Secrets to Investing like Warren Buffett, Synopsis:
The 7-Secrets to Investing like Warren Buffett teaches readers how to invest using value investing methods Value investing is about analyzing a company’s financial statements to see whether the stock market is undervaluing or overvaluing a company’s business. As the book’s title reads, The 7-Secrets to Investing like Warren Buffett, is about 7 secrets all investors should follow. But the book doesn’t just talk about 7 secrets, there are more. Behind each secret, there are further concepts ranging from financial planning, budgeting, and spending, and personal investment habits. At the end of this article is a full list of topics from the book.
The book’s title could have been “7 Secrets on Value Investing,” but such a title probably wouldn’t sell as many books. Warren Buffett is a big advocate of value investing and being one of the richest people in the world, this book with his name on it definitely sells.
There are a lot of areas the book covers but below are a few sections that I think is worth highlighting here
Have your finances in order before you Invest:
Around 85% of the book focuses solely on investing. The remaining 15% talks about investing habits. This is an important section where not a lot of other investment books talk about. These are concepts such as learning how to save, having the right insurance in case people lose their jobs, and debt management. Investors can’t be good investors if their finances are not in order. I think this is one area not a lot of people focus on.
Generate your own Investment Ideas:
One section worth mentioning is how to come up with good stock ideas on your own. When someone else approaches you with an investment tip, it is likely the idea has gone through several people and by the time it has gotten to you, the company may not be undervalued anymore.
Try going to the mall to see which stores are attracting the most foot traffic. Take a look at what the top investors are holding. Also, try products you use that you know you can’t go without. If you are a customer of it then it could be worth investing in.
Warren Buffett and His Mindset:
Even though this book wasn’t written by Warren Buffett personally, it does provide a glimpse to his investing approach and mindset. The book does bring up a period when Warrne Buffett felt the stock market was overvalued and sold all his holdings in 1971. He was patient and didn’t get back in until 1974. 3 years of waiting. Not a lot of investors take such a long view of the stock market
Another one of Warren Buffett’s ticks is his super focused mindset on finding value through investing. The book references one time when Warren Buffett was so deep in thought that he didn’t realize the walls in his house were repainted.
Financial Statement Analysis / Ratio Analysis:
University books put a lot of people to sleep trying to explain these concepts. But Mary Buffett and Sean Seah does a good job in breaking it down. They use 3 companies to get their points across. This is one section that should not be overlooked.
As a Seeking Alpha contributor (a content service for the financial markets and for new investing ideas), a lot of the tools I use to analyze companies can be found in these sections. Chapters 22 to 25 explains how the income statement, balance sheet, and the cash flow statements work. Chapter 29 on dividend yields and chapter 30 on PE ratios I talk about it often in my Seeking Alpha articles.
“The 7 Secrets to Invest Like Warren Buffett” Is a Great Addition to your Book Shelf
There are some people who think the stock market is a very risky venture, or that it is a casino where people make bets on stocks. This book takes that whole mystery behind the stock market out. There is a speculative way to invest where it is risky, and then there is the methodological and rational way to invest. This book focuses on the rational way to invest. Why pay someone to manage your money when you can learn to do it on your own?