VOL. XCIV, NO. 247
BOOK BREAKDOWN
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Saturday, January 17, 2026
Intermediate · 2024
The Warren Buffett Way: Investment Strategies of the World's Greatest Investor
by Robert G. Hagstrom
A Buffett investing playbook: buy a small number of wonderful businesses at sensible prices, judge them by economics and capital allocation, and hold for the long run.
Level
Intermediate
Strategies
4 types
Frameworks
3 frameworks
Rating
Target Audience
Ideal Reader
- Value investors who want a business-first framework for judging quality and price
- Readers who want a Buffett-style checklist for business, management, financials, and valuation
- Investors building concentrated, long-term portfolios with strong conviction
May Not Suit
- Readers looking for a step-by-step valuation textbook or accounting course
- Short-term traders or timing-focused investors
- People who want a purely passive indexing approach
Investor Fit
| Strategy | Value Investing · Quality Investing · Portfolio Management · Behavioral Finance |
| Time Horizon | Long-term (5+ years) |
| Asset Focus | Equities |
| Math Level | Basic Arithmetic |
| Prerequisites | Basic understanding of financial statements and business models · Comfort evaluating qualitative business durability and management quality |
Key Learnings
- 1Treat stocks as partial ownership of businesses; focus on business quality more than tick-by-tick prices
- 2Use the business-driven investing tenets (business, management, financial, value) as a repeatable due-diligence checklist
- 3Prefer durable competitive advantages, simple business models, and predictable cash generation
- 4Use owner earnings or look-through earnings thinking to connect accounting numbers to real owner cash
- 5Demand a margin of safety: buy below a conservative estimate of intrinsic value
- 6Capital allocation is a core edge: reinvestment discipline, sensible buybacks, and not overpaying for acquisitions matter as much as operations
- 7Concentrate when you have a real edge and the temperament to hold through volatility
Frameworks (3)
Formulas (3)
Case Studies (5)
The Washington Post Company
Takeaway
A strong franchise bought at a discount can compound for decades when economics and management are exceptional.
GEICO
Takeaway
A durable cost advantage plus patient ownership can create enormous value; insurance can be powerful when underwriting is disciplined.
Capital Cities/ABC
Takeaway
Great managers and high-return reinvestment opportunities can outweigh short-term noise; think in decades.
The Coca-Cola Company
Takeaway
Brand + distribution + pricing power can produce unusually stable cash generation; valuation still matters.
Apple, Inc.
Takeaway
A modern example of a consumer/tech ecosystem with moat-like traits; buy when the market misprices durability and capital returns.
Notable Quotes
“We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained.”
Mental Models
- —Circle of competence: only invest where you can explain how the business makes money and what could break it
- —Economic moat: sustainable advantage supports high returns on capital
- —Temperament > IQ: most mistakes are emotional, not analytical
- —Compounding via retained earnings: reinvestment at high incremental returns compounds value
- —Focus investing: a few great businesses held a long time can dominate results
Key Terms
No glossary terms documented for this book.
Limitations & Caveats
Keep in mind
- •Not a step-by-step valuation textbook; you still need accounting/statement analysis skill
- •Case studies are specific to Buffett's context (scale, access, temperament) and can be misapplied via hero worship
- •Owner earnings and maintenance capex require subjective estimates; bad inputs give false precision
- •Focus investing increases idiosyncratic risk; requires strong emotional discipline and a long horizon
Related Tools
Reading Guide
Priority Reading
- Business-driven investing tenets
- Economic moat and business quality
- Financial strength and owner earnings
- Valuation and margin of safety
Ratings
Concept Tags
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