The Warren Buffet Way: Robert G. Hagstrom, Jr.

The Warren Buffet Way, by Robert G. Hagstrom, Jr.
Investment Strategies of the World's Greatest Investor

This iconic book, originally written decades ago, covers the rise in fame and fortune of arguably the most famous investor of our time, Mr. Warren Buffet. While many over the years have speculated as to the strategies and mindset Buffet used to build his lucrative empire of stocks and companies, Hagstrom gave the public their first look at the inside of Buffet's world.

Buffet, as you may know, was a student of professor Benjamin Graham, whose published works The Intelligent Investor and the now-famous and difficult to find book Securities Analysis, inspired Buffet to attend Columbia Business School, where Graham taught. Graham's work, and Buffet's example, show us how well someone can do financially by following the principles of the concept known as Value Investing.

Hagstrom has updated this book several times over the years, and the latest edition carries more recent stories, but any copy you can get your hands on will contain the important basics of value investing, and of Buffet's story and strategic style. It is difficult to summarize the concept of value investing without simplifying it too much, however some of the basic tenets include:

• Look at your investments as companies, not as stocks or pieces of paper. Do in-depth analysis (also known as homework), and never buy a piece of a company if you would not also, resources permitting, be willing to buy the entire company. Buy on strong fundamentals, including books, management, competitive edge and growth potential.


• Be informed. A company's fundamentals can change, and the price will fluctuate based not only on this, but on varied market conditions and sentiment. Money is to be made by buying only when the stock price is considered a bargain - or on sale - and held at least until it has risen to fair market value ie. the market prices it properly.


• Never put your money at risk by speculating or buying when you are uninformed. Rule #1 is 'Don't Lose Money.'

Of course there is more to it than the simple points mentioned above, including learning how to read a company's financial statements and to compare it to its' peers in a given sector or industry, as well as to the stock market as a whole. There is also more to the Buffet story than just value investing, as not everyone knows. He has leveraged his wealth by making intelligent decisions such as becoming involved in the insurance industry, and to study the man's mindset is to increase your own financial intelligence.

You may consider as a companion book to this, written only a couple of years ago and extremely popular, Phil Town's Rule #1. Town's easy-going attitude and understandable explanations of what can be a very dry subject make for easy reading and application. Enjoy, and prosper!