The Essential Buffett: Timeless Principles for the New Economy

by Robert G. Hagstrom

Applying Buffett's principles to technology and international investing From the bestselling author of The Warren Buffett Way and The Warren Buffett Portfolio comes The Essential Buffett: Timeless Principles for the New Economy . In this fresh take on Buffett's irrefutable investment methods, Robert Hagstrom shows readers how to apply Buffett's principles to technology and international investing using real-life case studies of successful fund managers like Legg Mason's Bill Miller. Following the Buffett model, Hagstrom explains Buffett's four timeless principles: 1) analyze a stock as a business; 2) demand a margin of safety for each purchase; 3) manage a focus portfolio; 4) protect yourself from the speculative and emotional forces of the market. Then Hagstrom shows how Buffett's thinking can be applied in the new economy, addressing technology investing, international investing, small cap stocks, and socially responsible investing. Perhaps most valuable are Hagstrom's insights into the psychology behind Buffett's focus investing. For the first time, we are given sure-fire guidelines on how to become a winning Buffett disciple. The Essential Buffett will include convenient sidebars featuring key Buffett ideas, enabling readers to quickly compare Buffett's fundamental tenets.

Genres: Finance, Business, Nonfiction, Biography, Economics

304 pages, Hardcover

First published January 1, 2001

About the author

Robert G. Hagstrom is Senior Vice President and Director of Legg Mason Focus Capital. He has authored the New York Times best-selling The Warren Buffett Way and The Warren Buffett Portfolio, as well as The Nascar Way. He lives with his family in Wayne, Pennsylvania.

Reviews

[Tab Williams · Rating 3 out of 5]

This is really a summary of the first two books with some new chapters discussing current value investors, efficient market theory, picking managers, etc. Given that there wasn't much new information I was left wanting more and I think Hagstrom missed an opportunity to update case studies from the initial books to now. I was left wanting more.

[Aldrin Muhammad · Rating 5 out of 5]

One of the best investment book that I've ever read. This book changes my mind about investing in stock market properly. I highly recommend this book for those who want to learn more about value investing. How to select good stock with discount price and keep them as long as we can.

[Gordi · Rating 3 out of 5]

Nothing new

[Sangjun · Rating 1 out of 5]

Superficial book.

[Monica · Rating 2 out of 5]

Some of the key principles shut in this book are:

1. Buy stocks and chairs like you're owning the company
-buy a business that you understand and which has consistently good track record
-buy companies that have great future earnings and prospects
-give a margin of safety - buy at a value price
-check that there's good management that resist institutional imperative*
-focus on return on equity, not earnings per share

2. Focus investing in a few good stocks versus diversifying into things you don't understand
-less is more
-get very studies confirmed that most stocks are not necessarily better than few
-better basket of fuel stocks show greater standard variation in bedtime but also better performance in good times
-therefore, focus investing is more productive than modern portfolio theory

*the institutional imperative is that every financial / portfolio manager will try to beat the market in the short run, to show quarterly or yearly results. But the high turnover of stocks leads to higher costs and poorer performance in the long term.

[Sy. C · Rating 2 out of 5]

Terrible. Numerous mistakes throughout the book, such as mis-definition of the Kelly criterion. Misleading to the layman reader, and provides no new information to the experienced investor. At numerous times I wondered whether the author himself actually understands Buffett's approach or is just filling in a narrative pieced together using hindsight bias.

[Andronicus Kok · Rating 5 out of 5]

Finished reading The Essential Buffett. A good read about how Warren Buffet started and how he views investments n businesses. ;)

[Ian Cassel · Rating 4 out of 5]

Another good book on Buffett