Review on the book "The Warren Buffett Way"
The Warren Buffett Way, written by Robert G. Hagstrom, published by John Wiley & Sons, in Oct 2005.
This book gives a nice introduction to the world's great investor Warren Buffett's investment strategies. For people who are new to value investing, this book describes the basic principles very clearly and prepares readers for further study.
Near the end of the book, the author suggests focus investing if you are know-something investors and want to obtain beyond market returns. Otherwise, investing in index fund that mimics market returns is probably a better choice.
We suggest readers of the book think about a few questions.
First, do you follow a different style in your investment? Which style is better? Why would you choose one over the other? We think no matter which style you take, you should be able to defend it as an intelligent investor. If you cannot, then you probably should change or not invest at all.
Second, value investing has been around probably for more than 70 years. How many people follow it and how many of them succeed? What about other styles? Can you expect to do better than the other people, especially those professionals who can simply spend much more time than you?
Third, if investing in index fund can provide market returns, is that satisfactory? If so, why would you go for an active investment approach considering that you have to spend much more time and it still cannot guarantee success? If unsatisfactory, why? Isn't historical data telling us that stock market over the long run generates 8% to 10% returns yearly?
Since this books elaborates on Buffett's investment strategies which are not limited to stock market, you still need to educate yourselves with other books on investing. :)