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My Book Review of “The Warren Buffett Portfolio”

One of my favourite investment books has to be The Warren Buffett Portfolio by Robert G. Hagstrom. It is a continuation of his first book, The Warren Buffett Way.

This book talks about how we should look at our portfolio as a whole. Here are some of my key takeaways from this excellent book.

Focus Investment

Robert Hagstrom categorises Warren Buffett’s form of portfolio management as focus investment. He believes that Buffett only invests in a few companies with very huge economic moats. This means that these companies have long-term competitive advantages that are not easily replaced by competition. Buffett would then buy these companies at a reasonable price.

Using Probability To Invest

Buffett is a numbers guy, and as such, he focuses a lot on the numbers. He also thinks in terms of probability for each of his investment. He would think about about the probability of his investment making outsized returns for him in the long run. The higher the probability, the larger his investment size would be.

Understanding Psychology

Lastly, investing is not only about numbers. It is about the psychology of the market as well as your own. We have to understand what are our emotional shortfalls are and what the weaknesses of the market are. By understanding how the stock market affects our psychology, we would gain a deeper understanding of how we can be greedy when others are fearful and be fearful when others are greedy.

Foolish Summary

The Warren Buffett Portfolio is a short but insightful book that can bring our investment to the next level. Instead of just focusing on what are the companies we should be investing in, the book teaches us how we should view our entire portfolio and how best to position it for the future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.