Cover image for The Warren Buffett portfolio : mastering the power of the focus investment strategy
The Warren Buffett portfolio : mastering the power of the focus investment strategy
Hagstrom, Robert G., 1956-
Personal Author:
Publication Information:
New York : Wiley, [1999]

Physical Description:
x, 246 pages : illustrations ; 24 cm
Personal Subject:
Format :


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HG4521 .H227 1999 Adult Non-Fiction Open Shelf
HG4521 .H227 1999 Adult Non-Fiction Non-Fiction Area
HG4521 .H227 1999 Adult Non-Fiction Open Shelf
HG4521 .H227 1999 Adult Non-Fiction Open Shelf

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The Warren Buffett Way provided the first look into the strategies that the master uses to pick stocks. A New York Times bestseller, it is a valuable and practical primer on the principles behind the remarkable investment run of the famed oracle of Omaha. In this much-awaited companion to that book, author Robert Hagstrom takes the next logical step, revealing how to profitably manage stocks once you select them. THE WARREN BUFFETT PORTFOLIO will help you through the process of building a superior portfolio and managing the stocks going forward.

Building a concentrated portfolio is critical for investment success. THE WARREN BUFFETT PORTFOLIO introduces the next wave of investment strategy, called focus investing. A comprehensive investment strategy used with spectacular results by Buffett, focus investing directs investors to select a concentrated group of businesses by examining their management and financial positions as compared to their stock prices. A strategy that has historically outperformed the market, focus investing is based on the principle that a shareholder's return from owning a stock is ultimately determined by the economics of the underlying business.

Hagstrom explains in easy-to-understand terms exactly what focus investing is, how it works, and how it can be applied by any investor at any level of experience. He demonstrates how Buffett arranges his stocks in a focus portfolio and reveals why this is as responsible for his incredible returns as the individual stocks he picks. Ultimately, Hagstrom shows how to use this technique to build and manage a portfolio to achieve the best possible results.

Author Notes

Robert G. Hagstrom is Senior Vice President and Director of Legg Mason Focus Capital.

Reviews 2

Publisher's Weekly Review

In a straightforward follow-up to his bestseller, The Warren Buffett Way, Hagstrom shows how to put Buffett's ideas into practice. Buffett, universally described as one of the world's greatest investors, has made a fortune with a number of extremely large bets on a relatively small number of companies. By doing so, Hagstrom, who runs a mutual fund for the Legg Mason investment house, correctly points out that Buffett flies in the face of orthodox notions of portfolio diversity. Buffett's approach, which Hagstrom calls "focus investing," limits his investments to an extremely small number of stocksÄ10 or 15Äthat he thinks have the greatest long-term potential. In The Warren Buffett Way, Hagstrom identified how Buffett chooses those stocks. And here, in his straightforward followup, he shows the benefits of this approach: if you pick right, returns will be far greater than the market as a whole. The problem, of course, is that you have to pick winners. That, as Hagstrom notes, still takes hard work and discipline. (Apr.) (c) Copyright PWxyz, LLC. All rights reserved

Choice Review

Warren Buffett's portfolio consists of a limited number of stocks in firms he understands well and believes offer excellent long-term potential. Hagstrom uses the Buffett portfolio as a basis to argue for "focus investing," which involves constructing a portfolio with a small number of securities (less than 15), the exact opposite of the well-diversified portfolio pursued by most investors and portfolio managers. Focus investing stresses low portfolio turnover and a thorough analysis of management and a firm's financial position over time. Stock price volatility is perceived as an opportunity to increase positions instead of a source of risk to be reduced through diversification. Hagstrom argues that focus investing offers the best strategy to outperform the market and that the success of a few focus investors is evidence that the market is inefficient. A chapter on the psychology of investing emphasizes behavioral finance to explain the tendency of investors to overreact and retain losing positions. Although the work contains notes, citations to academic studies mentioned are not provided. This lapse makes the book of marginal use to libraries serving academic or professional investment programs. Most suitable for personal investment and public library collections. H. Mayo; The College of New Jersey

Table of Contents

1 Focus Investingp. 1
2 The High Priests of Modern Financep. 19
3 The Superinvestors of Buffettvillep. 37
4 A Better Way to Measure Performancep. 65
5 The Warren Buffett Way Tool Beltp. 87
6 The Mathematics of Investingp. 111
7 The Psychology of Investingp. 141
8 The Market as a Complex Adaptive Systemp. 161
9 Where Are the 400 Hitters?p. 187
Appendix A

p. 207

Appendix B

p. 218

Notesp. 223
Acknowledgmentsp. 233
Indexp. 237