The Warren Buffett Way, + Website, 3rd Edition

Foreword to the Second Edition

When Robert Hagstrom first published The Warren Buffett Way in 1994, it quickly became a phenomenon. To date [2004], more than 1.2 million copies have been sold. The book’s popularity is a testimony to the accuracy of its analysis and the value of its advice.

Any time the subject is Warren Buffett, it is easy to become overwhelmed by the sheer size of the numbers. Whereas most investors think in terms of hundreds or perhaps thousands, Buffett moves in a world of millions and billions. But that does not mean he has nothing to teach us. Quite the opposite. If we look at what he does and has done, and are able to discern the underlying thinking, we can model our decisions on his.

That is the profound contribution of Robert’s book. He closely studied Warren Buffett’s actions, words, and decisions for a number of years, and then set about analyzing them for common threads. For this book, he distilled those common threads into 12 tenets, timeless principles that guide Buffett’s investment philosophy through all circumstances and all markets. In just the same way, they can guide any investor.

The enduring value of Robert’s work is due to this clear focus—although the book talks about investment techniques, it is fundamentally about investment principles. And principles do not change. I can almost hear Warren saying, with his wry smile, “That’s why they call them principles.”

The past 10 years have given us a vivid demonstration of that basic truth. In those ...