One of the most interesting books on investment i‘ve read so far (well that’s not many, true..).
The book is easy to understand and explains the different strategies and cases with very easy language, avoiding jargon. There are plenty of real life examples and anecdotes about Buffet’s life, which sometimes slows down the pace, but makes the book’s flow smoother.

Definitely a good book to someone approaching the investment world, without technical financial background.

Buffett started reading his father's investment books when he was eight years old, an exceptional beginning to a lifetime of successful investing. His track record might never be matched, but The Warren Buffett Way leaves investors well-positioned to try. The author, Robert Hagstrom, reveals in an intuitive manner the key aspects of Buffett's process, providing a great foundation for those interested in concentrated stock portfolio investing.

Benjamin Graham, a pioneer in value investing and Buffett's most important mentor said that "Investing is most intelligent when it's most businesslike." Buffett considers these the "the nine most important words ever written about investing" and himself thinks of stocks as pieces of a business, rather than pieces of paper or lines on a chart. Consequently, he claims "I am a better businessman because I am an investor and a better investor because I am a businessman." Hagstrom concludes that this unique method to building stock portfolios might be Buffett's most important and differentiating trait.

Many in the investment community believe that constant portfolio activity, such as frequent trading, is necessary to add value. Buffett, in contrast, thinks the key to wealth is to allocate most of your capital to high conviction investments and hold them for as long as possible, if not forever. Investors should act as if they only have a 20-hole punch card for a lifetime of investment selection. Much of his track record, according to Buffett, comes from just twelve investment decisions. His portfolio construction process is reasonably simple - find competitively advantaged franchises likely to generate materially higher earnings for many years into the future, wait for them to trade at a margin of safety to the discounted value of expected cash flows, and then buy with exceptional conviction. In Buffet's words, "What I love, of course, is a big castle [attractive business] and a big moat filled with piranhas and crocodiles [competitive advantages]."

Hagstrom says that another unique feature of Buffet is his tendency to start each day with the question "has the market done anything foolish today that I can take advantage of?" His investment philosophy is to stay within his core competencies and recognize when others have likely stepped outside of theirs. Once a modest level of intelligence is achieved, temperament and discipline determine outcomes. Independence is key, as Mr. Market is there to serve, not to instruct, and the value of attractive businesses are substantially more stable than sometimes manic market prices. Some investors are wary of volatility, but a stable business with a volatile share price is a perfect combination for Buffett.

Hagstrom says that Buffett is a unique combination of Graham, Philip Fisher, Charlie Munger, and John Burr Williams. Williams provided the base valuation methodology - discounted cash flows equals business value. Graham enshrined the margin of safety and value concepts. Fisher advocated knowing a few great businesses very well and concentrating most of your assets in them. (As a side note, Fisher's book Common Stocks and Uncommon Profits is my personal favorite.)

Last, but not least, Munger helped Buffett appreciate the economic returns that come from buying and owning high quality businesses that can compound your capital for you. Companies that compound their earnings tend to have exceptional managers, a key requirement in Buffett's framework. He has said that "no matter how attractive the prospects of their business, we've never succeeded in making a good deal with a bad person." Capital allocation is probably one of Buffett's greatest skills, and in his view one of the most common failures of corporate management.

Buffett is aging, but he claims the ideal way to invest hasn't changed in the last 50 years. At times, some have argued that innovations like efficient market theory are the future and that Buffett is a relic. His response is that as long as investors continue believing in new ways of investing that distract from understanding the fundamentals of business, Mr. Market will continue to do foolish things.

Here are Buffet's key investing tenets, according to Hagstrom, which provide a checklist to help implement Buffett's investment approach. Some will say this is overly simplistic, but as Buffett has said himself, "investing is simple, but not easy."

Business:
1. Is the business simple and understandable?
2. Does the business have a consistent operating history?
3. Does the business have favorable long-term prospects?

Management:
4. Is management rational?
5. Is management candid with its shareholders?
6. Does management resist the institutional imperative?

Financial:
7. What is the return on equity?
8. What are the company's "owner earnings"?
9. What are the profit margins?
10. Has the company created at least one dollar of market value for every dollar retained?

Value:
11. What is the value of the company?
12. Can it be purchased at a significant discount to its value?

The Focus Investor's Golden Rules:
1. Concentrate your investments in outstanding companies run by strong management.
2. Limit yourself to the number of companies you can truly understand. Ten to twenty is good, more than twenty is asking for trouble.
3. Pick the very best of your good companies, and put the bulk of your investment there.
4. Think long-term: five to ten years, minimum.
5. Volatility happens. Carry on.

Summary:
This book is interesting because Warren Buffett is interesting. The process for investing success outlined in the book is not for everyone. It involves assessing businesses for their merit and having a rather concentrated portfolio rather than the common advice of a diversified portfolio. If you're looking to be an active trader, I think this book has a lot of value. For me, I'm not too enthusiastic about active trading and am happy to sit with my passive investments.

I would recommend this book to anyone interested in actively investing.

The main message I took from this book is that active investing is a big, deep ocean that I'd rather not be a part of.

Some notable points:
- "What we do is not beyond anyone else's competence. I feel the same way about management as I do about investing. It's just not necessary to do extraordinary things to get extraordinary results."

- That which is difficult to measure can be badly measured.

- Buy a company for less than two thirds of its net asset value and focus on stocks with loss price to earnings ratios.

- The value of any investment is the discounted present value of its future cash flow.

- Tenets of the Warren Buffets Way:
Business tenets -
1. Is the business simple and understandable?
2. Does the business have a consistent operating histiry
3. Does the business have favourable long term prospects?

Management tenets -
Is management rational?
Is management candid with its shareholders?
Does management resist the institutional imperative?

Financial tenets -
Focus on return on equity, not earnings per share.
Calculate owner earnings.
Look for companies with high profit margins.
For every dollar retained, make sure the company has created at least one dollar of market value.

Market tenets -
What is the value of the business?
Can the business be purchased at a significant discount to its value?

- Investment success is not a matter of how much you know, but how realistically you define what you don't know. Invest in your circle of confidence.

- Probabilities are the mathematical language of risk.

- Bayesian analysis is an attempt to incorporate all available information into a process for making inferences.

- When dumb money acknowledges its limitations, it ceases to be dumb.

يعطي فكرة أوضح عن مفهوم الاستثمار بالاسهم ومعاينة الشركات وفق قواعد منهجية لمراجعة اذا ما كانت تستحق الاستثمار

Brilliant book.

I can't believe I'm reading investment strategy books. Who am I anymore? This gets three stars for being rather interesting and mostly readable (as readable as a book that bandies about risk and pricing formulas and accounting numbers can be), but it's not quite as practically useful for the beginning investor. I still found it quite interesting to learn about Buffet's history and his major mentors, and I think this book might serve as a useful shortcut for me in summarizing and highlighting Buffet's annual reports. IF we ever actually start practicing any of this Value/Focus investing strategy stuff, I may come back to this one. I still feel a bit like a fish out of water here, but the more I read, the more intriguing/fascinating I find all this stuff to be.

Despite the silly cover, this book is well worth reading. Hagstrom does a impressive job describing Buffett's approach to buying businesses or portions thereof. Filled with reverse engineered examples of past investments, this book provides insights into Buffett's decision-making process and unending search for "no-brainers." Along with the famous Buffett biographies, this should be one of the first books an aspiring investor reads.

Wouldn’t it be great if Warren Buffett wrote a book? He has always wanted to. It appears that The Warren Buffett Way, Second Edition by Robert G. Hagstrom is about as close as we can get for now.

In this book, the author tells us about how he researched the book. He has read virtually everything that the Oracle of Omaha has written. He has watched countless hours of video of the man.

Obviously, no one can know anyone completely. However, The Warren Buffett Way Second edition may come close. As I understand it, Buffett himself has read the book and agreed to its publication.

This book is well-written and extremely well-researched. It contains information from the coveted Berkshire Hathaway annual reports. Many people buy the highest price stock on the stock exchange just to get to read the annual reports written by this man. I have never seen one.

We give The Warren Buffett Way, Second Edition by Robert G. Hagstrom all five stars. We think if anyone is serious about investing, they should read this book. It might well open your eyes to different ideas on investing.


We checked this book out of the Wharton County, Texas library. We are under no obligation to write any review, positive or negative.

We are disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255.

Describes how the investment decision making process of the world's most successful investor. Good discussion of what makes a company valuable.

وارن بفت اشهر المستثمرين في العالم وثالث اغنى رجل في العالم .. بدأ حياته بلا ثروة وحصل على ثروته التي تقدر ب٨٠ مليار من تأسيس شركة بيركشاير هاثاواي للاستثمار، اي ان عمل هذه الشركة هو ان تدير اموال الاغنياء كي تزيدها وبالمقابل تحصل على عمولة.

يعني ان وارن بفت عاش حياته وهو يخاطر باموال الاخرين ليشتري بها اسهم الشركات الناجحة،كان هذا هو مربط الفرس، كيف احرز وارن بفت هذه الثقة الكبيرة بالاسهم التي اشتراها، نتيجة حياة من الاستثمار انه استمر دائما في صعود كبير ومتفوق كثيرا عن السوق، الى درجة انه جمع كل هذه الثروة، فماذا يا ترى فعل ؟؟

وارن بفت لا يحب الاستثمار في قطاع التكنولوجيا، هو يحب الشركات العريقة التي تقدم منتجا او خدمة سيرغب فيها الناس الان وفي المستقبل، شركات يمكن ان تفهم ببساطة كيف تجني النقود ولا توجد صعوبة في التنبؤ بمستقبلها، مثل شركة كوكاكولا التي تقدم مشروبات غازية سيرغب الجيل القادم في شربها ايضا، او شركة جيليت التي تصنع شفرات حلاقة سيبقى الاحتياج لها ، او بنك يحتوي على نظام جيد للخدمات المصرفية وهكذا، جدير بالذكر انه استثمر في امازون ايضا وهذه من الشركات التكنولوجية، ولكن ربما وجد في مستقبلها الشيء الكثير، فشركة ابل مثلا مصيرها ضبابي فربما تسقط مثلما تسقط نوكيا او غيرها، اما امازون فهي سوق كبيرة وان كانت الكترونية ففيها جانب غير تكنولوجي.


ولكن هل يضارب وارن بفت؟ لا هو يشتري ويحتفظ لسنوات او عشرات السنين، ولكنني عرفت حديثا انه يبيع ويجدد اسهمه من فترة لأخرى. واذا جئنا لقاعدته الذهبية فهي ان تشتري الاسهم حينما تسقط سقوطا مدويا ولكن بشرط ان تعرف ان هذه الشركة هي شركة جيدة بالفعل، وهذا هو الامر الصعب في الموضوع، ان شركة بفت توظف الكثير من الباحثين الذي يتابعون الشركات ويتقصون الكثير من خفاياها ليعرفوا اذا كانت تصلح للشراء ام لا، وتوجد طرق لدى بفت في الاستحواذ على الشركات فهو يحب ان يتملك الشركات كلها اذا استطاع وهو يقول ان وضع البيض في سلة واحدة احيانا يكون ممتازا ، تتنوع مجالات الاستثمار لديه في قطاعات متنوعة وهو يحب كثيرا مجال التأمين ومجال اعادة التأمين.

فماذا يا ترى نستفيده من الكتاب؟ ان الشركات التي ربح منها بفت الكثير او استحوذ على غالبية اسهمها قد صارت الان غالية كثيرا، فالشراء منها وان كان مربحا بعض الشيء ولكنه لن يكون ربحا خرافيا كالسابق فهذه الشركات وصلت للعالمية بالفعل وحققت اعلى التصنيفات ومن الطبيعي ان تسلك طريق الأفول الان، واما الشركات التي سوف تكون مربحة في المستقبل فنحن لن نعرف عنها ذلك الا بفهم كبير لاداء الشركة وهذا امر غاية في العسر، لم يبق سوى ان نقلد هذا المستثمر او ذاك ماذا اشترى هذه السنة

ولكن حتى الان تزاولني الشكوك كيف استطاع بفت جمع هذا المبلغ المقدر بالمليارات من عملية بطيئة هي الاستثمار في الاسهم ، فاسهم الشركات الناجحة التي امتلكها بفت تستطيع مضاعفة اموالها كل عدة سنوات .. فهذه المضاعفة في الارباح لا تأتي بهذه السرعة فكيف بدأ هذا الرجل بشيء بسيط وضاعفه الى هذا الحد واخذ هامش ربح من عملائه ووصل الى هذا القدرالهائل من الثروة

Don't bother. I expected better from the practitioner who wrote this, Robert Hagstrom of Legg Mason Capital Management, but in its audio version it's dry, simplistic, and badly read by someone who gears his pace toward eighth graders. That's probably the best audience for this book. All others, especially anyone who has even a passing familiarity with Buffet, should skip this and read "The Essays of Warren Buffett" or Berkshire Hathaway's annual reports instead.

This book provides details about Warren Buffett's business purchases and how he values them. He is not concerned about what the stock market or economy is doing at a given moment since he believes the US economy will continue to grow steadily over time. Buffett just focuses on the businesses and whether he can make a purchase at a 50% or greater discount to intrinsic value. He is interested in businesses he can understand, that have competent leadership, long-term prospects, and a price with a margin of safety.

The value of this book is in demonstrating the intrinsic value calculation applied to various scenarios such as his purchase of Coca Cola stock. The reader can easily see Buffett's calculation at the time of purchase and the price he paid.

Buffett's methodology has changed slightly over the years, but the principles remain the same. He used to search for bottom of the barrel businesses to extract value from. That's where the name "Berkshire Hathaway" came from - a dying textile business he tried to revive but ended in failure. He looks for healthier businesses now with better long-term prospects.

I believe his methodology needs to continue to morph and perhaps his managers in line for succession have already begun to adapt his strategy to current times. I believe the rise of automated investing and comprehensive news coverage has reduced the number of opportunities for Buffett. I think his investment method has gradually shifted from pure "value" toward mixed "growth" and "value". In the book Buffett says he's 85% Benjamin Graham (value) and 15% Philip Fisher (growth) but I think over time he's shifted slightly more toward the Fisher approach. Buffett's managers who will succeed him have made purchases such as Visa, Mastercard, Apple (currently the largest BRK holding), and Amazon. This also represents the need to adapt to understand and include technology businesses in BRK's portfolio.