This video covers the key concepts of the book “The New Buffettology” by Mary Buffett and David Clark. The key premise of the book is to teach you how Warren Buffett approaches the stock market. This book is one of the best I’ve read for teaching you how to invest like Warren Buffett.
The book begins by explaining how Warren Buffett stands to differ from the crowd in picking stocks to buy. Most of the investors buy on good news and sell on bad news. Warren Buffett on the other hand looks to buy on bad news. Also, while most people are skeptical of a stock when it is beaten down to lows, Warren Buffett sees this as an opportunity to evaluate a stock. He starts looking deep into the company fundamentals to see if the underlying business model is sound and that the negative even is just a one-time occurrence.
If Warren Buffett is confident in a business, believes it fits his investing criteria, and is trading at a below fair valuation he looks to buy. The author defines this approach as contrarian investment strategy. Buffett takes this strategy a step further. He practices a selective contrarian investment strategy, in which he buys the stocks of companies with a durable competitive advantage when they are trading at values that make business sense.
Oh, and make sure you ignore crazy Mr. Market. If you listen to him too much you’ll end up selling at precisely the time you should be buying, and buying when you should really be selling!
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