About The Warren Buffett Way
The first edition of The Warren Buffett Way was published in 1994. While Buffett was already a legendary investor, the book marked the first in-depth examination of Buffett's investment techniques ever published. It quickly hit The New York Times best-seller list and stayed there for 21 weeks.
In short order, the book emerged as an international hit. Translated into 14 languages, The Warren Buffett Way became one of the most successful, global financial books of all time, with total sales exceeding one million copies.
Unlike most books where sales taper off after a couple of years, The Warren Buffett Way continued to sell steadily, year after year. The continued success was a tribute to Warren Buffett's enduring success as an investor and the timelessness of his investment principles.
A second edition was published in 2005. Updated to reflect Buffett's investments since the first edition was released, the new edition was again a big hit with investors all over the world, with multiple foreign translations and hundreds of thousands of copies sold.
The latest edition distills the Buffett methodology to its essence and, most importantly, explores the overarching question of why more investors don't embrace and apply Buffett's proven methods for picking stocks. As Buffett says, "What we do is not beyond anybody else's competence. I feel the same way about managing that I do about investing: It's just not necessary to do extraordinary things to get extraordinary results."
To answer the question of why more investors don't follow in Buffett's path, author Robert Hagstrom draws on the new field of behavioral finance and his long experience as an investment manager to lend insight into the psychological challenges to emulating Buffett's approach.
Despite 24-hour investment news on cable television and the internet, Hagstrom notes that investors continually struggle to earn a profit. The rise and fall of the stock market appears to have neither rhyme nor reason. After losing money, many people stay on the sidelines too long, paralyzed by the pain of their losses. Often they get back into the market too late, just when the market is about to top. The cycle repeats time and again.
Hagstrom writes: "Far above the market madness stand the wisdom and counsel of Warren Buffett. In an environment that seems to favor the speculator over the investor, Buffett's advice has proven, time and again, to be a safe harbor for millions of lost investors. Occasionally misaligned investors will yell out, 'But it's different this time'; and occasionally they will be right. Politics spring surprises, the economy reacts, and the stock market reverberates in a slightly different tone. New companies are born while others mature. Industries evolve and adapt. Change is constant, but the investment principles outlined in this book have endured.
"Here is a succinct and powerful lesson from the 1996 Berkshire Hathaway annual report: 'Your goal as an investor should be simply to purchase, at a rational price, a part interest in an easily understood business whose earnings are virtually certain to be materially higher, five, ten, and twenty years from now. Over time, you will find only a few companies that meet those standards — so when you see one that qualifies, you should buy a meaningful amount of stock.'
"Whatever level of funds you have available for investing, whatever industry or company you are interested in, you cannot find a better touchstone than that."