Checklist: Tenets of the Warren Buffett Way


Pick the best value stocks with our Stock Ranks, screening and valuation tool. Try the live demo today.

First published at

Hurricane Capital

Follow me at

Hurricane Blog

Twitter

To get this kind of information and other exclusive articles before regular readers, get on the VIP Mailing List today.

********

The “Tenets of the Warren Buffett Way” was examined in the book The Warren Buffett Way, written by Robert G. Hagstrom.

The tenets also appear in Hagstrom’s other book The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy.

This book is also one of Charlie Munger’s book recommendations, see here.

Here’s what Robert Hagstrom wrote:

With The Warren Buffett Way, I hoped to describe and codify Warren Buffett’s style of investing, so that others might benefit from understanding his approach. In that earlier book I outlined the fundamental investment tools, or tenets, by which Buffett evaluates possible purchases. These tenets are summarized in Chapter 1, page 8.

The underlying principles haven’t changed much since The Warren Buffett Way was published, in 1994 (“That’s why they call them principles,” Buffett once said), but many readers have asked for clarification about applying the tenets in today’s market.

In summary, the process of focus investing involves these actions:

• Using the tenets of the Warren Buffett Way, choose a few (ten to fifteen) outstanding companies that have achieved above-average returns in the past and that you believe have a high probability of continuing their past strong performance into the future.

• Allocate your investment funds proportionately, placing the biggest bets on the highest-probability events.

• As long as things don’t deteriorate, leave the portfolio largely intact for at least five years (longer is better), and teach yourself to ride through the bumps of price volatility with equanimity.

To learn more about each of the tenets, check out the books mentioned above.

tenets of warren buffett

[EDIT] Jae here. I’ve added links to articles where I’ve written on some of the questions mentioned in the checklist above.

To get this kind of information and other exclusive articles before regular readers, get on the VIP Mailing List today.

********

About the Author

hurricanecapThe pseudonymous Hurricane Capital was Born in the 80’s, lives in Sweden with a Masters of Science in Business and Economics from Stockholm University. Got interested in value investing and devotes his free time and investing. The main goal through the Hurricane Capital blog is to learn about different investing topics, investors and business cases for investment.

Pick the best value stocks with our Stock Ranks, screening and valuation tool. Try the live demo today.

Pick Winning Stocks and Fatten Your Portfolio

LIVE PREVIEW OF AAPL, MSFT