book review - innovation and entrepreneurship

8/6/2019 Book Review - Innovation and Entrepreneurship

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Book Review

BBSD 778 Innovation & Entrepreneurship

Presented By Rounak Mehta

Student ID - 10328969

The Winning Investment

Habits of Warren Buffett &George Soros By Mark Tier2003-04


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About the Author

Mark Tier is an Australian writer and businessman who live in HongKong; partly because paying taxes is against may religion as Marksuggests. Founder of the investment newsletter World Money

Analyst, which he published and edited in 1991, he is also theauthor ofUnderstanding Inflation, which became a bestseller inAustralia in 1974.

His other famous books are The Nature of Market Cycles and HowTo Get A Second Passport

His articles on investing and other themes have appeared in Time,The Australian, The South China Morning Post, and elsewhere.

Six years ago when he adopted The Winning Investment Habits ofWarren Buffett and George Soros himself, sold all his business

interests and now solely from the return on his investments. Healso coaches investors who want to transform their investmentresults and works on improving his tennis game.


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About Warren Buffett

Warren Buffett is anAmerican investor andindustrialist. He is regardedas one of the mostsuccessful investors of the

world. He is the primaryshareholder, Chairman andCEO of Berkshire Hathaway;which is a conglomerateholding company

headquartered in Omaha,Nebraska, United States,that oversees and managesa number of subsidiarycompanies.


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About George Soros

George Soros is anHungarian American

financer and a

businessman. He becameknown as The Man Who

Broke the Bank of England"

after he made a reported

$1 billion during the

1992 Black Wednesday UK

currency crises.


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Brief Introduction

The book has been divided into two parts by theauthor Mark Tier.

Part one is named the same as the title. It tells usabout the practices followed by the worlds richestinvestors Warren Buffett and George Soros whostarted with nothing and made billion dollarfortunes solely by investing.

Part two is named - Making the habits your own.This is the most interesting part of the book whichbriefs us about the plans for successfulinvestments.


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Book Topics

The first part of the book is about the success stories and theideology of Warren Buffett and George Soros.

Warren Buffet and George Soros are the worlds most successfulinvestors. In the year 2003, Forbes magazine listed Mr. Warren andMr. Soros as the 2nd and 38th most richest investor respectively. The1st chapter briefs about whats common in both these investors.

The writer, Mark Tier, analyzed their thinking and came to someamazing correspondences like: Buffett and Soros share the samebeliefs about the nature of the markets. Both are far more focusedon not losing money than on making it. They never diversify theirinvestments.

Author also writes about ice breakers, who in his opinion are the

one who can walk up to a stranger and initiate a chat away liketheyre lifelong friends. He suggests some common traits like this:

Belief.

Mental Strategy.

Sustaining Emotion.

Associated Skills.


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This pat of the book is all about Marks point of view on the seven deadlyinvestment sins which is a common mistaken belief of most investorsabout how to achieve investment success. They are:

Sin 1 Believing that you have to predict the markets next move tomake big returns.

Sin 2 The Guru belief: if I cant predict the market, theres someonesomewhere who can and all I need to do is find him.

Sin 3 Believing that Inside Information is the way to make really bigmoney,

Sin 4 Diversifying

Sin 5 Believing that you have to take big risks to make big profits.

Sin 6 The system belief: somebody, somewhere has developed a

system some arcane refinement of technical analysis, fundamentalanalysis, computerized trading, Gann triangles, or even astrology thatwill guaranty investment profits.

Sin 7 - Believing that you know what the future will bring and beingcertain that the market must inevitably prove your right.


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This book also tells us about the life beginning of boththe entrepreneurs; about how tough was theirchildhood and how they survived. An interesting fact I

came across in a part of the book is that Mr. Buffett, inthe year 2003, was being paid US $100,000 per year ashis salary. This made him the lowest-paid CEO of anyfortune 500 company.

The book further deals on topics such as NeverLoosing Money, Counting a Loss, High ProbabilityEvents etc. But the best paragraph in this chapter isCan You Make It Back?, where the author in aninvestment seminar asks the audience that how manyof them have lost money in the markets. As expected

he saw almost every hand up from the chairs. Then heasked that how many of them made that money back?Everyone was surprised by this question. Mark thenresponded them with some reflections on what shouldbe done to regain that money


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The paragraph Risk is Manageable tells about the four riskavoiding strategies of Mr. Soros which are:

Dont Invest

Reduce Risk

Actively Manage Risk

Manage Risk Actuarially

To Mr. Buffett, the difference between partial or completeownership of a business makes no difference: his focus isalways on the same thing, the quality of the business.

In addition, if Mr. Buffett cant understand a business hehas no way to measure its quality of its future so he cant

value it. Mr. Soros has a strategy thats exactly opposite of Mr.

Buffet which states that, Invest first and investigate later.


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In a part of the book, Mr. Buffett readily admits hismistakes; as a glance through his annual letter toshareholders makes abundantly clear. Every other year orso, hell devote an entire section to his mistakes du jour.

Mr. Soross method for handling mistakes is built into hissystem. I have a criterion that I can use to identify mymistakes, i.e. the behavior of the market.

When the market tells him hes made a mistake heimmediately beats a hasty retreat. If he did otherwise, hewould no be following his system.

This is the biggest reason for Mr. Soross success.

In peoples minds, the name Warren Buffett and GeorgeSoros tend to be linked with their impressive investmenttrack records 24.7% and 28.6% per year, respectively. Itsas though they appeared from nowhere with this genius forinvesting.


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The second part of the book is kind of a tutorial for thereaders who aspire to be as big and successful investors likeWarren Buffett and George Soros. This part is called Making

the Habits Your Own. The author suggests some simple tips while investing. Think

about each investment and ask yourself what actions youtook: Why did you buy it? How did you go about buying it?Did you do your own research or followed someone elses

opinion? In addition he says, for client who are already doing most

things right, I only need to focus on the few things they aredoing wrong.

In a chapter from the book, the author also suggests the

prospective investors to clarify their goals and theirpurpose of investment.

Mark says that financial goals are secondary as they serveto be a means for supporting some higher purposes whichis actually true.


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Mark also advices to measure the investment onappropriate criteria.

He brings the example of Mr. Buffett whomeasures the characteristics of a good businessincluding the quality of management, the natureof its franchise, the strength of its competitiveposition, its pricing power, its return on equity

and, of course, its price. While Mr. Soros is measuring the quality of his

investment hypothesis against events theyunfold.

Author says that your investment criteria shouldbe the features of an investment in you chosenniche that you can measure today which youknow will consistently make your profits overtime.


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THANK YOU

book review - innovation and entrepreneurship

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