Robert Hagstrom

In this episode of The 100 Year Thinkers, Robert Hagstrom explains why modern portfolio theory pulled investors away from business analysis and toward portfolio math. We discuss Markowitz, beta, efficient markets, Warren Buffett, Charlie Munger, business-driven investing, owner earnings, benchmarks, and why thinking like a business owner changes how investors understand risk. The Warren Buffett Portfolio, 25th Anniversary Edition https://amzn.to/4uz8sZ3 Topics covered: Why Hagstrom thinks modern portfolio theory changed investing’s objective The difference between volatility, variance and real investment risk How Benjamin Graham and John Burr Williams framed risk around intrinsic value Why beta became the dominant shorthand for risk How the 1973-74 bear market helped institutionalize modern portfolio theory Why Berkshire preserved the business owner’s lens The “cathedral and casino” distinction between owning businesses and trading stocks Owner earnings, return on invested capital and cost of capital Why business owners often make better long-term equity investors Look-through earnings and building a “mini Berkshire” The difference between making money and beating a benchmark How benchmarks can distort investor behavior Why knowing yourself and your clients matters in portfolio construction Matt Zeigler and I had the privilege of hosting Robert Hagstrom for a special 100-Year Thinkers Edition of the Excess Returns Podcast. Available now on Excess Returns Podcast and Talking Billions. 🎧 I’m excited to share this episode with you—it’s reposted here with permission and blessing from the Excess Returns team. Don’t miss it! And follow their work, links below. https://www.excessreturns.co/ https://cultishcreative.com/ Podcast Program – Disclosure Statement Blue Infinitas Capital, LLC is a registered investment adviser and the opinions expressed by the Firm’s employees and podcast guests on this show are their own and do not reflect the opinions of Blue Infinitas Capital, LLC . All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.

In this episode of The 100-Year Thinkers, Robert Hagstrom explains why modern portfolio theory pulled investors away from business analysis and toward portfolio math. In this episode, Hagstrom, Matt Zeigler and Bogumil Baranowski discuss Markowitz, beta, efficient markets, Warren Buffett, Charlie Munger, business-driven investing, owner earnings, benchmarks, and why thinking like a business owner changes how investors understand risk. The Warren Buffett Portfolio, 25th Anniversary Editionhttps://amzn.to/4uz8sZ3 Topics covered: Why Hagstrom thinks modern portfolio theory changed investing’s objective The difference between volatility, variance and real investment risk How Benjamin Graham and John Burr Williams framed risk around intrinsic value Why beta became the dominant shorthand for risk How the 1973-74 bear market helped institutionalize modern portfolio theory Why Berkshire preserved the business owner’s lens The “cathedral and casino” distinction between owning businesses and trading stocks Owner earnings, return on invested capital and cost of capital Why business owners often make better long-term equity investors Look-through earnings and building a “mini Berkshire” The difference between making money and beating a benchmark How benchmarks can distort investor behavior Why knowing yourself and your clients matters in portfolio construction Timestamps: 00:00 Robert Hagstrom on why risk is not volatility 00:40 Business-driven investing vs portfolio math 02:42 How modern portfolio theory defined risk as variance 06:38 Graham’s margin of safety vs Markowitz’s definition of risk 09:44 Sharpe, beta and simplifying portfolio risk 12:51 Why the 1973-74 bear market helped MPT take over 16:20 Why MPT became institutionalized without proving it could beat the market 18:53 Buffett, Keynes and concentrated investors violating MPT 22:53 Stocks as businesses and Buffett’s cathedral vs casino 30:01 Business analysis, owner earnings and return above cost of capital 36:41 Look-through earnings and running a mini Berkshire 41:34 Making money vs outperforming a benchmark 47:30 Why Berkshire’s public and private businesses shaped Buffett 50:05 How investors can start applying the Buffett way 54:05 Bogumil on how investing theory becomes accepted truth 58:09 Why direct ownership creates responsibility and conviction 01:00:15 Investor know thyself and the limits of outsourcing caring 01:03:35 Finding the right clients for a business-owner investing approach

Today I’m diving head-first into the compelling mind of legendary investor, financial author and returning guest, Robert Hagstrom. Celebrating the book’s 30th anniversary, Robert discusses the importance of investing with conviction and the strategic contrarian approaches of Warren Buffett. How did Warren Buffett’s legendary tactics of going against the market grain shape the investment landscape? Can those same tactics be applied to everyone’s investment philosophy? We also delve into Buffett's key influences and the future of investing in a post-Charlie Munger era, exploring what it means to value businesses in today’s inflated markets. Don’t miss this blend of educational depth and engaging storytelling with me and Robert Hagstrom on today’s episode of CAPitalize Your Finances!

To become smarter, you need to hang out with really smart people. That's why I'm so excited this week to bring you my special guest, legendary investor and award-winning New York Times best-selling author of "The Warren Buffett Way," Robert G. Hagstrom. Investing is complicated. Sometimes you don't know if you've made the right decision until long after it's too late. This is what makes people like Warren Buffet so interesting, because you have the opportunity to use them as a kind of model of what could potentially be a much more successful investment strategy. On today's episode, Robert Hagstrom and I will be talking about (among other things) "focus investing," something that Warren Buffet has practiced for many years now. He'll tell you what focus investing is, how it works, and how almost any investor can apply it for themselves. Learn all about it on this week's episode of CAPitalize Your Finances!

In this episode, we are joined by Robert Hagstrom, who is an author, investment strategist, and portfolio manager. His books include The New York Times bestselling The Warren Buffett Way and The NASCAR Way: The Business That Drives the Sport and Investing : The Last Liberal Art, in which he investigates investment concepts that lie out with traditional economics. What Was Covered Robert's commitment to the "latticework" theory of investing, which is based on building connections between different mental models and disciplines The reasons that Robert views biology as the better discipline to think about markets rather than the physics based approach most commonly used in modern portfolio theory The risks of comparative analysis for decision making given our tendency to look for what is similar more than what is different Key Takeaways and Learnings Steps to being a better investor by using multiple models of comparison and analysis and observing multiple perspectives Robert's advice on the questions to ask yourself before investing in companies, and how he personally looks for growth in potential new investments How to think outside of traditional economic theory and use concepts from biology, philosophy, and psychology to make better business decisions Links and Resources Mentioned in this Episode Get in touch with Robert Hagstrom via email , LinkedIn or Twitter Equity Compass Strategies , website Investing: The Last Liberal Art , a book by Robert Hagstrom The Warren Buffett Way , a book by Robert Hagstrom The NASCAR Way: The Business That Drives the Sport , a book by Robert Hagstrom Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger , a book by Charlie Munger

Latticework New York 2018, September 6, 2018, The Yale Club of New York City