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The New Buffettology – Mary Buffett & David Clark
September 24, 2007, 4:25 pm
Filed under: investments/finance/economics

Personal notes from The New Buffettology by Mary Buffett & David Clark

I read the predecessor of this book and found it to have a more quantitative slant as compared to other books. It reiterates quite a few points in the previous book but it does introduce a few new ideas and concepts. A good read overall.

Buffett’s selective contrarian investment philosophy

  • High profit margins + high inventory turnover
  • Distinction between durable long-term competitive advantage companies and price-competitive companies
    • Unique product/service vs. commodity
  • When to sell – when value investors leave the game and analysts and pundits announce earnings are unimportant in valuation, when business models have changed, when target price is reached, when business environment changes, when the money can be redeployed more profitably elsewhere.
  • When to buy – when newspapers announces bear market
  • Buying into bad news – five situations: stock market correction, industry recession, individual business calamity, structural changes and war.
  • Perfect buying situation is created when a correction or panic is coupled with one of the other situations.
  • Areas of commerce with durable competitive advantage
    • Businesses that fulfill a repetitive need with a consumer product with brand-name appeal.
    • Advertising businesses that provide a service that manufacturers must continuously use to persuade the public to buy their products.
    • Businesses that provide repetitive consumer services that people and businesses are consistently in need of.
    • Low-cost producers and sellers of common products that most people have to buy at some time in their life.
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