A book review by Jeremy Prescott
Glen Arnold is the author of the UK’s best-selling investment book, The Financial Times Guide to Investment, and many others. After a successful academic career with a research focus on “What works in investment”, he now runs his own equity portfolio and also writes, some of his newsletters for ADVFN forming the basis of this book.
The book covers the period from 1941, when the 11-year old Buffett bought 3 shares in Cities Service Preferred for himself and his sister with some $120 saved from paper rounds and reselling lost golf balls, up to 1978, by when the 48-year old Buffett had achieved personal net worth of $100m. After an initial scene-setting chapter, the book looks at some 22 of the deals that helped get him there, with the lessons that can be learned about Buffett’s approach to investment and how this evolved over the period.
I found the description of how Buffett learned his trade particularly fascinating – attending the Columbia investment course taught by Benjamin Graham (who awarded him the only class A+ ever), eventually being allowed to work for Graham (summarising the merits of 10,000 US quoted companies from their Moody cards in a windowless basement), learning the value of a customer franchise the hard way when he bought a poorly-located petrol station opposite a successful competitor, knocking on the door of an insurance company (on a Saturday) as a 21-year old to discuss its merits with its chairman (this led to a very successful purchase), and more besides. As interesting is the description of Buffett’s application of investment principles to the businesses that his partnerships owned, which clearly also focussed his approach to investing in quoted companies.
The book is an easy and thought-provoking read. A further three volumes are promised, with Chinese language publishers apparently pressing Arnold and Harriman House to complete the story from the $100m foothills of 1978 to now the fourth largest quoted group in the US.
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