Warren Buffett: Inside the Ultimate Money Mind. 2021. Robert G. Hagstrom, CFA. Wiley & Sons.
For the past two decades, Robert G. Hagstrom, CFA, has written several books about Warren Buffett. This new book, however, is unique for its focus on the investment thinking process. Many books, videos, discussions, and articles about Buffett try to help individual investors and fund managers emulate him. Not many of his readers come close to reproducing Buffett’s success. Hagstrom argues that there is a big difference between knowing the path and walking the path. He states that the key to the latter is to have a “monetary mind” and that Warren Buffett’s mind is the “definitive monetary mindset”.
Hagstrom explores the traits required to have a monetary mind. They include self-sufficiency, rationality, pragmatism, and lifelong learning. The book provides information on how successful investors have developed these attributes through a lifetime of work and experience.
The author begins with the importance, for the mind of money, of learning from both the successes and failures of past companies. This historical study provides valuable information on the current set of opportunities. Hagstrom explains how Warren Buffett has been an avid reader and enthusiastic observer since childhood. He was particularly influenced by a book he read at age 11 that looked at several companies that started from scratch.
While the book offers plenty to take away, the most important thing for me is how to operate in the “investment zone”. Doing so is possible by focusing on the basics of a business. I must remember that I do not participate in any competition with investors or speculators in the short term. The daily noise of price fluctuations shouldn’t worry me, but I stand firm in the belief that the market will end up making a fair share price.
The book also offers a perspective on perennial investment controversies. For example, investors are constantly debating the relative merits of growth and value stocks. They also argue non-stop about the discount rate that should be applied to future profits, a topic of especially intense focus in a world of low interest rates.
In addition, Hagstrom offers an insight into the life and work of luminaries such as Benjamin Graham, Bill Miller, William James and Howard Buffett (Warren’s father). It also covers the camaraderie between Warren Buffett and Charlie Munger. Taking a leaf out of the book that influenced Warren in 1941, A thousand ways to earn $ 1,000, the author provides a compendium of books that investors should read.
Warren Buffett: Inside the Ultimate Money Mind is a must-read for investment professionals, active investors, and students aspiring to a career in money management. Their concepts are explained lucidly and are well supported by the data. It should not be a one-time reading, but a guide to the rest of your investment career.
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All publications are the opinion of the author. As such, they should not be construed as investment advice, nor should the views expressed necessarily reflect the views of the CFA Institute or the author’s employer.
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