Tuesday, March 26, 2013

Warren Buffet Invests Like A Girl Book Review

Warren Buffet Invests Like A Girl
tagline: And Why You Should, Too
Author: Louann Lofton
8 Essential Principles Every Investor Needs to Create a Profitable Portfolio

This was my first book specifically about Warren Buffet. I've perused some of his annual shareholder letters and I've read articles online, but never a book with his image on the front cover.
Louann Lofton works for www.fool.com and outlines the research that emerged about the differences in characteristic traits of men and women and how it affects investing behaviors, and consequently their rate of returns. This through lower trading volume(lower costs), longer time view, patience, less overconfidence.

Warren Buffett's investing characteristics are shown to mimic those of female investors and is credited with the reason for his phenomenal success. Additionally, there are several interviews with prominent female fund managers interspersed throughout the chapters that add real life examples of the principles being discussed.
Warning: Reading this book may elevate your desires to do your own research and try your hand at picking individual stocks for your investment portfolio.
But before you run away, thinking that it is blasphemy to consider investing in something besides a low-cost ETF or index fund, remember the idea of the "Core and Explore".
With the "Core" of your portfolio, i.e. a significant portion 85% to 95%, do the low cost asset allocation with your select ETF's and be happy. You'll be diversified, you'll get market returns, and all is well because you are exercising restraint because you know that you aren't smarter than the rest of the stock pickers out there.
Take the remaining 5% to 15% and "Explore" with it. Warren Buffett didn't become the Oracle by investing in safe, low cost funds. He researched and bought valuable companies that would benefit him in the long run. Try your hand. You might win some, you might lose some. And if you lose, it won't be your entire life savings.
The above principle was touched on briefly in the book, and I've seen variations of it posted before. I like this idea, and have set aside 5% of my portfolio to allow myself to try things out. It's a great learning experience. The key, and the book highlights this, is that when you buy stock, you are buying a piece of that company. Warren Buffett wouldn't consider owning shares of a company for only a few days, or even months. He's focused on the future earnings of that company. Additionally, he would never consider an investment without first becoming intimately acquainted. Research, research, research. If you find a company that is trading at a bargain, it will be the research that will give you staying power if that stock price dips further in the short term. You know you're not taking a risk, because you did your homework.
I found this quote particularly instructive.
US Hardcover, pg91
...Buffett said, "You can't do well in investing unless you think independently. And the truth is, you are neither right nor wrong because people agree with you. You're right because your facts and reasoning are right. In the end, that's what counts."

Tuesday, March 19, 2013

Rework Book Review

"Ignore this book at your own peril." Seth Godin

That's the tagline on the cover of the New York Times Bestseller, REWORK by Jason Fried & David Heinemeier Hansson.

I didn't want to risk the peril, so I read it. And if you're intrigued about entrepreneurship, blogging, productivity, the path to success, etc. then you'll probably like Rework, too.

Overall, this is a great bathroom book. My wife laughed when I told her that, but it's because the chapters, if you can call them that, are only a page or two long at most. The book consists of over a hundred nuggets, ideas, truths, rules, that are succinctly explained. In fact, this review is likely an infraction of the "less is more" mentality of the book already.

You don't have to sit down and read straight through, or as fast as you can go. In fact, it might be better to take it piece meal and take the time to ponder the concepts and how you might apply them to make your life or business more awesome.

There are lots of great things to learn, but I'll just highlight four that stood out to me.
"No time is an excuse"
We all whine that we don't have time to be wonderful, we don't have time to write that novel in our heads, we don't have time to exercise. Don't quit your day job yet, they advise. Instead, drop an hour of TV or World of Warcraft, stay up an hour later, not all night. "Once you do that, you'll learn whether your excitement and interest is real or just a passing phase....When you want something bad enough, you make the time - regardless of your other obligations."
I think authors like Rachelle J. Christensen who is a Mom first and an author second is a perfect example of this.

"Make tiny decisions"
"Big decisions are hard to make and hard to change....Instead, make choices that are small enough that they're effectively temporary. When you make tiny decisions, you can't make big mistakes."
This is the try it out mentality. Stop thinking so polar or binary. It's not an all or nothing game changer. Test it out and see what happens on a small level and go from there.

"How to say you're sorry"
"A good apology accepts responsibility. It has no conditional if phrase attached....Here's another bad one: 'We apologize for any inconvenience this may have caused.' The 'may' here implies there might not be anything wrong at all."
Own up and be sincere.

"Take a deep breath"
This was one of my favorites because it addresses the fact that people are afraid of change. Change means stepping away from the known. This is important to understand in business or in family relationships as well.
"People are creatures of habit. That's why they react to change in such a negative way....So when people complain, let things simmer for a while. Let them know you're listening....You'll probably find that people will adjust eventually. They may even wind up liking the change more than the old way, once they get used to it."
Just consider US Presidential elections. It has become increasingly difficult to oust a sitting President. People know how bad it has been for the last four years, but the idea of change scares them more than the known, or what they are used to and so they accept the status quo of another bad four years.

Rework is a good read. You'll like it. And if you happen to be in management - you're employees will love you' if you learn anything from this book. :)


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