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The Warren Buffet Way
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Listen in 17 min.
Learn the key ideas of the book by R. G. Hagstrom

The Warren Buffet Way

The Story of the investor Warren Buffett

The Warren Buffett Way tells the story of the world’s greatest investor. From a very young age, Buffett showed an interest in, and an ability to, manage numbers and do small deals. The creation of the Buffett Partnership, which then merged with Berkshire Hathaway, the company he ran, arose as an inevitable evolution of his previous actions and decisions. The Buffett method is unusual, but also totally replicable. As well as the thorough analysis and mathematical calculations needed for an in-depth study of a company’s value, his method requires rationality and patience, a quality many believe they possess, but which very few actually do have.

The Warren Buffet Way
Read in 13 min.
Listen in 17 min.

Our talents emerge during our childhood

Today everyone knows Warren Buffett, the infallible investor, who exhibited unusual abilities from a young age.

Even as a child, he had already found a way to earn money: he used to buy a 6 pack of cans of Coca Cola for 25 cents, and sell single cans for 5 cents each, to earn himself a profit of 5 cents. Even if the sum he earned was meagre, this little game of his showed Buffett’s ability to produce results, which were able to guarantee him a 20% profit.

At the age of 11, he and his sister Doris made their first investment. They pooled their savings and bought a few shares in Cities Service Preferred at $38,25 a share. However, when the share value began to fall, his sister began to push him to sell because she did not want to lose her savings. This experience was of great help to Warren Buffett because it provided him with one of the first simple laws of being a good investor: be patient and do not let yourself be carried away by your emotions.

It was thanks to rationality and patience that Buffett was able to build his empire. With a degree in economics, and a master’s degree from Columbia University, he began working in New York for the Graham fund, the first hedge fund in history. Benjamin Graham was one of the best teachers he had ever had; he taught Buffet the theory of Value Investing, which is the ability to invest in companies whose shares are undervalued, buy them and hold onto them for a long time. The success of the Buffett Partnership, which later merged with Berkshire Hathaway, an already listed textile company, confirmed his fame, making Buffett the most famous investor in the world.


The key ideas of "The Warren Buffet Way"

Our talents emerge during our childhood
Looking for a solid company is the first guarantee for a successful investment
The Warren Buffett method for share purchasing criteria
Selective investment compared to diversified investment
The principle of rationality must win over being emotional in the event of market fluctuations
Loss aversion and people’s irrational tendencies
The ability to be patient is of paramount importance to profitably manage investments over the long term
Take-home message
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