Customer Reviews

The Warren Buffett Way

5 star:		(44)
4 star:		(22)
3 star:		(22)
2 star:		(7)
1 star:		(6)

 

 

I am continually amazed by the good reviews this book receives; so I finally felt compelled to write. There is nothing in this book that Warren Buffett hasn't already said in his annual letters. Robert Hagstrom revealed his true reason for writing this book when the first paperback edition came out and in it, in fine print, was a notice stating that Hagstrom had started an investment fund designed to invest using Warren Buffett's principles (read: way). That is, he wrote the book so you would learn his name, become confident in his ability to analyze investments like Buffett does, and invest in his fund (which has a hefty expense ratio and has performed quite poorly I understand). So he writes this page book, in which he recommends that if you ever have the chance to read Buffett's annual letters, you should, since they "read like a book on his investment philosophy". I took his suggestion, ordered the back annual letters (sold by Berkshire Hathaway for $15) and found they repeated everything in this book - sometimes word for word (now how could Buffett have known what Hagstrom was going to write?). I get the feeling that Hagstrom has never met Buffett and never discussed investing with him (unlike Lowenstein, Lowe, Train, etc.) and his only research for this book was Buffett's annual letters. I learned more about Buffett's style from Roger Lowenstein's biography. Take Robert Hagstrom's advice and purchase the annual letters; they say the same thing - except Buffett's sense of humor is better.

First let me say that the low rating I'm giving does not reflect my opinion of Warren Buffett and his methods in general, but rather specifically this book by Hagstrom.

I was quite disappointed by this book. It seems confused about whether it is an investment guide or historical narrative, and so fails to do an adequate job of either. (For a much more interesting account of Buffett's life and investments, read Roger Lowenstein's biography).

I was hoping this book would explain in specific detail HOW Buffett determines whether a company's shares are undervalued by the market and by how much. However I found that the few explanations in this book are too vague to be of any real practical application in analyzing companies and making investment decisions. The book spends more time detailing WHAT Buffett has invested in, as opposed to WHY. And more time discussing what happened to these companies AFTER Buffett had invested in them, rather than what specifically made them attractive to Buffett beforehand.

Maybe this would be a good enough book for someone to read as an introduction to Buffett, if it wasn't just so boring!

The "Warren Buffet Way" never ventures too far from common sense but whether that makes it ingeniously sound or blandly uninspired will be left for the reader to decide. The techniques Warren Buffet employed to attain success (and wealth) are well documented here with summaries of his investments from early life to recent times (1994). Each investment in analyzed through the lense of Warren Buffets economic principles, a blend of widely recognized economic minds and Warren Buffets own basic philosophy, and the result is an appreciation for his business sense and stock selecting ability.

This hindsight review of his choices is partially intended to teach you, the reader, how to make equally good investments and turn a profit without extensive risk. The problem lies in the fact that Buffet's confident simplicity is hard to obtain. The crux of his theory is calculating the intrinsic value of a company through research that is probably second nature to long-time professional investors like Buffet but is vague or downplayed in the book. Technological methods and industry readings are turned down in favor of a physical appraisal of the company and its management and an unexplained calculation of its potential.

But who has the time or money to visit and interview every possible investment they are considering? And to do so when they are only just starting out with little idea of where to start or what is an important indicator of value and while being told to expect only long-term gains? The book tells you to look past the popular and fickle market at the company itself but it is unclear what to focus on. The idea is good, I'll try to put it to good use in my own investing, but its too general to nail down or check off on a list.

Overall though, it will provide an insightful look at one of the richest men in the world. You'll learn some basic investment strategies and a little history. Its not an economic Bible but it may help beat the crowd without going too far over your head.

I am not Warren Edward Buffett. Unlike Mr. Buffett, who has the delightful headache of trying to figure out where to put his steadily growing billions, I am a non-investor, sitting on the sidelines, wondering what all the fuss is about. Like most readers of this book, I have been told incessantly to invest for retirement, and not knowing exactly how I should do so, I figured it might be a good idea to glean a few secrets from a proven successful investor. Hence, I read The Warren Buffett Way from cover to cover, hoping to learn a few things.

And what did I learn? I learned that I am not Warren Edward Buffett. Unlike Mr. Buffett, whose circle of associates includes all of the Beautiful People of Corporate America, I am surrounded by ordinary people, more than a few of whom are looking for a way to get rich quick. Whereas Mr. Buffett is patient and thoughtful with his investments, most of the people I encounter are thoughtless and reckless with their gambles. These two things, which I increasingly began to ponder as I read this book, distinguish me from the Oracle of Omaha, and quite possibly from most readers of this book.

The book consists of nine chapters, and is mostly historical in nature. It details many of Buffett's past exploits in the stock market, mostly the good moves but also some bad ones, and offers some of the principles guiding Mr. Buffett's stock investing strategy, grouped into three classes called Management, Financial and Market Tenets. The first four chapters of the book delve into the early history of Berkshire Hathaway, the key influences on Mr. Buffett which helped to shape his investment philosophy, Mr. Buffett's perspective on the financial markets, and the principles by which he goes about purchasing a business. The last five chapters of the book give example after example of some of Mr. Buffett's past stock moves, and tries to show his Tenets in action.

The style of the book is mostly active until the fifth chapter, whereupon it becomes plodding. The book is extremely repetitive at points, and as other reviewers have pointed out, key concepts are not fully explained up front, suggesting that the possible target audience for this book are those having a strong background in the general principles of economics and business.

In all honesty, I have previously encountered most of the content of this book in coursework or self-study. I previously read Mr. Hagstrom's The Warren Buffett Portfolio, and found the two books to be similar in some respects. That said, I still found this book to be very interesting and useful, primarily because it exposed me to an investment approach which utilizes these concepts in ways I had not previously considered. I also found it highly interesting on an anecdotal level, given that Mr. Buffett's investment career spans The Go-Go Years, The Nifty Fifty Stocks and the 80s and 90s Tech Stock Boom, and yet he never once participated in these tech-stock manias but handily outperformed tech stock investors nonetheless.

Like I said, I am not Warren Edward Buffett and I can not expect or even hope to do what he does, but that does not mean that I can not think like him. Even Mr. Buffett cautions the small investor in this regard, as there are things that he can do that none of little guys can do. Yet, he also has said that there are things the little guy can do that he can not do. That said, the book deserves to be read by any one lacking the ability to reason through the process of investing. However, readers at all levels should not stop with this book. Others have pointed out that one could get even more information straight from the horse's mouth- the Berkshire Hathaway website.

On the other hand, as this information details past moves for which the conditions surrounding them are most unlikely to come around again, I believe that the more astute reader looking to learn more should consult The Money Game by Adam Smith for a brief historical look at financial foolishness (albeit the late sixties but the resemblance to Right Now is striking), The Theory of Investment Value by John Burr Williams for Buffett's original basis for valuation, and The Intelligent Investor by Benjamin Graham for a more detailed explanation of the concepts of margin of safety, intrinsic value, and the benefits associated with ignoring the market noise. These three books will help one learn how to reason through the investment problem, as this is the most important step, aside from finding smart people (as Mr. Smith admonishes forcefully in The Money Game and Buffett has consistently done) and thinking more but acting less (as Buffett has said- do a few things right and screw everything else).

With "The Warren Buffett Way", Robert Hagstrom attempts to bring the financial genius of the world's greatest investor within reach of the average man on the street. The book is a good overview of Buffett's career, outlining the types of companies he looks for, the calculations he uses to determine a company's value, and the type of earnings history he looks for in an investment. These are basic principles that need to be hammered home to even the most seasoned of investors, and the book serves as a good primer for that reason. I have bought it as a gift on more than one occasion. (Although the "Buffettology" workbook is better.)

However, I give the book four stars for the following reason: hindsight is twenty-twenty. Hagstrom seems to believe that returns comparable to Buffett's are attainable to the average investor. But the average investor knows little about interpreting financial statements and little credit is given to Buffett's instincts and ability to see opportunity where others do not. Although it is well within the reach of the average investor to achieve above-average returns, this book should be viewed as a first step in that goal. There is still much to learn. I recommend this book solely for its emphasis on investment in companies with consumer-monopoly products, strong earnings histories, etc. The book helps reinforce the fundamentals of common stock investing, but I like Hagstrom's book "The Warren Buffett Portfolio" much better...

Britt Gillette
...

There isn't anything in this book that you won't find in Warren Buffett's annual letters to the shareholders of Berkshire Hathaway (available for free at the Berkshire Hathaway website). If you've not read those letters then I suggest you get right to it - they clearly lay out Mr Buffett's approach to investing and are written in a very easy to read, humorous and homely style.

This book pulls many of the highlights from those letters together in one place and lays out some major tenets and themes that could be said to make an investment "Buffett like".

If you're not familiar with Warren Buffett and have not read his letters to the shareholders of Berkshire Hathaway - then you will likely find this to be a good introduction to Buffett. Anybody else should probably steer clear as there isn't anything new here.

I was reading some of the reviews here and I was surprised that some people say this book is great for beginners. Well, I'm a beginner in investing and I was just totally lost on some of the concepts preached in this book. Concepts like "Owner's Earnings" is alittle new to me. Although the book explained this is net income plus amortization/depreciation minus capital expenditures, I thought it could elaborate just what all these terms are. But it doesn't. It doesn't even clearly explain the reason for this formula. Definitely not beginner stuff. I think everyone should read this book because it does teach some solid investing principles. Advice that I believe really makes sense. But I was just going nuts at the vagueries in this book. Probably one of the most important points is "how to value a company". But it just runs through the calculations like it was some easy arithmetic problem. I must have read those portions ten times and still couldn't figure it out. I was relieved to find some examples in the appendix. Goodie! Wrong. That was just as hard to follow...no step by step explanation. But I managed to figure it out. For anyone who might be wondering what the heck is a discount factor (which nowhere in the book mentioned, but is required for the calculations), here is the formula 1/(1+r)^t where r is the discount rate and t is the Nth year. I found this on the internet! Lastly, someone made a comment about Hagstrom writing this book to promote his own mutual fund. I don't see anything wrong with that. I think that is great. Now there is proof for all to see if this book really works. As of now, it only gives you a 5-year annualized growth of 3.52%. S&P 500 is 3.16%, FYI! So the fund is not so hot. I only brought this up because Hagstrom never interviewed Buffet for this book (Says so in the preface). His take on the Buffet Way is anyone's good research in the Bershire Hathaway annual reports. Noone will probably know how to trade like Warren Buffet but Warren Buffet himself! That makes sense because after all, if I know how to make money in stocks to become the second richest man, would I want to tell you?

I bought this book back in 1997. Up to then I had never invested in the stock market and did not give it any thought.

This book opened a new door to me. I remember to grow ever more enthusiastic as I read through its pages for it showed me a whole new world. A gust of fresh air made me realize the overwhealming advantages of partly owning a great company in the stock market at a reasonable price as a small investor. I quit looking at the stock market as a simple casino and turned serious attention to it for long term investment. Not only did I find the studying of different companies by fundamentals and the process of investing very fun, but also financially very rewarding.

Today I want to thank from these pages Warren Buffett and Robert Hagstrom for contributing to the spread of financial common sense in a world where the lack of it is stunning. And above all, for the privilege to read this masterpiece on investing and get an insight of Warren Buffett investment style.

This book is strongly undervalued and should be bought by everyone that cares about his financial future. Strong buy recommendation. Full of wisdom and fun to read. And I owe to it my personal financial success, averaging 40% yield per year, just applying the investment principles taught here.

Superb.

For starters, you can read this book and understand investing even if you're not a businessperson. Beginners should read the biography written by Roger Lowenstein first although this book is much more interesting.

The book talks about the billionaire investor Warren Buffett, how he got started, his achievements, the type of guy he is, how he calculates what a company's worth. Much like a biography... but the best part in my opinion, are the details on Buffett's past purchases. Hagstrom (the author) actually gives charts to show these which to me is invaluable. You'll know what I mean if you've ever tried to put money in stocks as a value investor.

To the experts (and I don't mean the people with advanced degrees or MBAs but the experienced VALUE investor), this book is a must have. I use it to study the specific purchases he made and by looking at the graphs, I think it's not hard to tell what Buffett was thinking, given what he already knows about the companies. And plus, you'll get some idea on calculating intrinsic value which I honestly think came from Hagstrom, not Buffett. But it's a start.

As it relates to price, I'd say this book is undervalued, it's a screaming buy pitch (under six bucks when I bought it)... You'll learn a great deal about stocks and about people (from managers to stockbrokers).

Buy this book if you are looking for a very basic book to start learning Warren Buffett's investing style. You will only get information on the companies he has purchased and their performance and a very basic explanation on why Mr. Buffett thought they were such great values when he bought them.There is no technical explanation here on how to figure book value or how to find your own value stocks. It reads like "The history of Warren Buffett" not "How to invest like Warren Buffett".
I do like that the author included the classic Ben Graham analogy about "Mr. Market" that explains how to think of the stock market as a partner who offers to buy out your part of a business each day.
For technical knowledge on value investing read"The five keys to value investing" or the classic "The intelligent investor".
For a complete explanation on stock market trading read the 5 star book "The neatest little guide to stock market investing" by Jason Kelly.