The Warren Buffett Portfolio, 25th Anniversary Edition, a Wiley Investment Classic - Hardcover

by Robert G. Hagstrom (Author)

Celebrates 25 years of Buffett's focus investing strategy with fresh insights for today's investors

For more than two decades, The Warren Buffett Portfolio has guided investors toward mastering the art of focus investing--a strategy that concentrates on a select group of superior businesses rather than spreading resources thin across countless holdings. With the release of the 25th Anniversary Edition, Robert G. Hagstrom, one of the most respected interpreters of Warren Buffett's investment philosophy, offers fresh insights into why concentrated portfolios remain the key to long-term wealth creation, even in today's volatile markets. This updated edition addresses the limitations of conventional portfolio theory and challenges readers to rethink risk, diversification, and market efficiency through the lens of Buffett's remarkable success.

Hagstrom expands the original work with powerful new material that reflects what he has learned since introducing the concept of focus investing. New chapters explore the philosophy of focus investing including a deeper exploration of Charlie Munger's "Art of Achieving Worldly Wisdom." In addition, there are new chapters on the mathematics of focus investing, psychology of focus investing and how to think about the structure of markets.

Equipping investors at every level with the tools, models, and mental framework needed to build portfolios capable of outperforming the market over time, The Warren Buffett Portfolio, 25th Anniversary Edition:

• Compares modern portfolio theory with Buffett's alternative view of risk and portfolio management.
• Provides update analysis of "Superinvestors of Buffettville."
• Explains probability theory and how to apply to investing, Kelly Optimization Model, high active share investing, frequency versus magnitude, sideways markets, trends of the system versus trends in the system.
• Explores the psychology of investing through the insights of myopic loss aversion, the fallacy of risk tolerance questionnaires, System 1 and System 2 thinking, and the psychology of misjudgment models.
• Tutors readers on how to build a latticework of mental models explaining the core models of rationality, pragmatism, philosophy of language, self-reliance, physics model of equilibrium along the side the biological model of evolution and adaptation.
• Presents new frameworks for how to think about market prices and the changing structure of markets, patience premium, wisdom of crowds and diversity breakdowns.
• Offers a fresh, new approach to investing called "business-driven investing" designed for achieving and compounding long-term growth.

Front Jacket

Robert G. Hagstrom, CFA, has tracked Warren Buffett's investment philosophy since 1984, long before the world recognized Buffett as a business icon. With more than 40 years of investment experience and three bestselling books on Buffett that have sold over one million copies worldwide, Hagstrom offers unmatched insight into focus investing--the strategy of concentrating capital on a select group of superior businesses rather than spreading resources across countless holdings.

The Warren Buffett Portfolio challenges conventional portfolio theory and its assumptions about risk, diversification, and market efficiency. Hagstrom explains why concentrated portfolios remain the key to long-term wealth creation, even in volatile markets. Drawing on Buffett's remarkable success, the book examines probability theory, Kelly Optimization, and the critical distinction between frequency and magnitude in portfolio performance.

This 25th Anniversary Edition expands on the original work with new chapters on the psychology and philosophy of investing, including loss aversion, System 1 and System 2 thinking, and Charlie Munger's misjudgment models. Readers will also find timely discussions on navigating sideways markets, managing drawdowns, expectations investing, and Munger's Art of Achieving Worldly Wisdom. The author covers the mathematics, psychology, physics, biology, and philosophy of focus investing and how to think about prevailing market prices.

Essential reading for undergraduate and graduate students in finance, economics, and investment management courses--especially within MBA and CFA programs--this book also serves as a trusted reference for professional investors, portfolio managers, and financial advisors seeking to refine their strategies and build portfolios capable of outperforming the market over time.

Back Jacket

PRAISE FOR THE WARREN BUFFETT PORTFOLIO

"Robert Hagstrom sent me his latest book, The Warren Buffett Portfolio. I was flabbergasted to find it not only very well written, but a considerable contribution to the synthesis of human thought on the investment process. I would recommend that all of you buy a copy of Hagstrom's second Buffett book."
--Charlie Munger, Former Vice Chairman of Berkshire Hathaway, From the 1999 Berkshire Hathaway Shareholder Meeting

"This is an outstanding investment book and an important one. In The Warren Buffett Way, Robert Hagstrom explained how Warren Buffett invests. In The Warren Buffett Portfolio, he explains how you can become a better investor. Studied carefully and taken to heart, the principles and methods covered in this book will profit the novice and professional alike. A rare achievement."
--Bill Miller, Former Portfolio Manager, Legg Mason Value Trust, 1998 Morningstar's Domestic Equity Fund Manager of the Year, 1990s Morningstar's Domestic Equity Fund Manager of the Decade

"Thank you, Robert Hagstrom, for the finely honed thinking, the clear writing and simple strategies that help all of us be more successful at one of life's most intriguing and intimidating tasks: investing your money."
--Janet Lowe, Author, Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger

Author Biography

ROBERT G. HAGSTROM, CFA, is Chief Investment Officer of Equity Compass Investment Management, LLC, and Senior Portfolio Manager of the Global Leaders Portfolio. With more than 40 years of investment experience, Hagstrom has tracked Warren Buffett's investment philosophy since 1984. His three books on Buffett have sold over one million copies worldwide and have been translated into 18 languages.