The Warren Buffett Way by Robert Hagstrom

For several years, the best description of Warren Buffett and his deals was The Warren Buffett Way by Robert Hagstrom.

As an analysis of Buffett's many investments from the outside looking in, it is an excellent book. First published in 1994, it looks at many of his ideas and most successful purchases. These holdings are analysed within the parameters of what was known at the time about Buffett's strategies - using the basis of 'tenets' that must be adhered to.

Many of his major purchases are investigated. When published, this book was one of the few places that analysed his decisions. Subsequent books and remarks by Buffett have helped to clarify much of his thinking - but this was where many of the theories were first discussed.

This approach works as it explains point by point why the company made a sound investment and why the strategy is logical and successful. If you want to understand Warren Buffett's investments in a clear and concise way, this is a great way to go about it.

Of course, the book also discusses the managerial relationship at Berkshire Hathaway with long time business partner and friend, Charlie Munger. Theirs is clearly an intriguing relationship - and an immensley profitable one!

More than a passing look is also given to the intellectual framework for his success and the influence of both Ben Graham and Phil Fisher.

His early investment thinking was formed during his time as a student of Ben Graham, author of The Intelligent Investor. This philosophy revolved around buying undervalued businesses and holding on until the stock market recognised the value and repriced the assets.

Of course, this strategy required a large portfolio of assets and by definition, involved purchasing assets in some businesses that were in deep trouble. Good businesses invariably sell at good prices!

If after two years, a profit had not been made, Graham recommended simply selling the holding (if possible) and moving on to another, more appealing, corporation.

A number of less than spectacular investments later, his investment philosphy was greatly influenced by the writing of Phil Fisher and the idea of a "business franchise", otherwise known as the protective moat that protects a business model.

It was this combination of buying excellent businesses with an impregnable business franchise at excleent prices when the market discounted their worth has made Buffett incredibly wealthy.

In short, if you plan to buy a book or two to help you understand successful investment at a higher level, The Warren Buffett Way by Robert Hagstrom should prove to be a very wise purchase.