Since I planned to take a course in Investments, I decided to read books on Investment strategies and the Intelligent investors. One of the most popular books suggested to me was the book, "THE WARREN BUFFET WAY" by Robert G Hagstrom. One wonders how a subtle and sober person like Warren Buffet be one the richest person in the world. After reading the book, I understood that it was mainly because of his intelligence and determination. The writer says, Mr.Buffet was mainly influenced by four people; Benjamin Graham, Philip Fisher, John Burr Williams and Charles Munger. It is extremely fascinating to know how the investment strategies of Warren Buffet is a combination of the ideals and believes of these four men. Quantitative analysis of Benjamin Graham, Qualitative importance of Philip Fisher, Discount model of John William and boldness from Charles Munger.
According to me, Mr. Buffet follows the bottom up approach where he does a careful analysis of the company, its growth potential, future cash flow, management, etc. He does not worry much about the industry for he believes that a great company will find way to come out of any kind of recession. Each one of his investments display if not all, a few of these characteristics. One of the other interesting things about Mr.buffet which in fact is contradictory to other investors is not to over diversify your portfolio. It is true that diversification is a tool to reduce the risk but at the same time highly dispersing one's portfolio may prove as a disadvantage. It is extremely challenging for a manger to watch various industry, economy on a timely basis. Mr.Buffet's advice is to invest in the areas of one's knowledge and competence.
Overall, the book gives an amateur investor, basic yet detailed explanation about Berkshire Hathaway's investment decisions in "The Warren Buffet Way".
