Robert Hagstrom returns to discuss the investing principle he believes most value investors still misunderstand—despite decades of evidence from Warren Buffett. In this conversation, we explore why focus investing works, what traditional value investors got wrong about the Magnificent Seven, and how the industry's obsession with low P/E ratios and short-term tracking error leads to missed opportunities. Hagstrom also reflects on lessons from working with Bill Miller and explains why evolving your investment approach is essential for long-term success.
In this episode, we discuss:
How Hagstrom fell into money management by accident
What Buffett’s 1983 letter taught him about investing
The dangers of rigid value investing frameworks
Why most active managers fail over time
The key to compounding that investors overlook
Drawdowns, tracking error, and the psychology of focus investing
Why private equity’s appeal is mostly an illusion
What Buffett’s surprise CEO handoff really means for Berkshire Hathaway
