The Warren Buffett Way Workbook

THE IDEAL COMPANION TO THE WARREN BUFFETT WAY THIRD EDITION The Warren Buffett Way Workbook is the ideal complement to the Third Edition of The Warren Buffett Way —enabling you to review and reflect on how one of the greatest investors in history goes about his business. This comprehensive guide provides an invaluable opportunity to explore your understanding of the strategies and techniques covered in the main text, before integrating them into your own investment endeavors. The Workbook , which parallels the main book chapter by chapter, contains over 250 multiple-choice questions, with both answers and explanations of those answers, as well as over 200 essay exercises. Topics reviewed include: The basic set of principles, or tenets, that guide Buffett's investment decisions—whether he's buying a company outright or buying a piece of that business, in the form of shares of stock The focus investing style in which Buffett prefers to manage a portfolio How individuals from Benjamin Graham and Philip Fisher to Charlie Munger influenced the way Buffett sees investing The psychological challenges of managing a Warren Buffett portfolio as well as the role of patience in long-term investing And much more Also available, The Warren Buffett Way Video Course. Narrated by Robert Hagstrom, it effectively brings Buffett to life from both a professional and personal perspective.

Preface ix PART I QUESTIONS Chapter One A Five–Sigma Event: The World’s Greatest Investor 3 Multiple–Choice Questions 3 Essay Questions 8 Chapter Two The Education of Warren Buffett 9 Multiple–Choice Questions 9 Essay Questions 17 Chapter Three Buying a Business: The Twelve Immutable Tenets 19 Multiple–Choice Questions 19 Essay Questions 31 Chapter Four Common Stock Purchases: Nine Case Studies 35 Multiple–Choice Questions 35 Essay Questions 48 Chapter Five Portfolio Management: The Mathematics of Investing 53 Multiple–Choice Questions 53 Essay Questions 64 Chapter Six The Psychology of Investing 67 Multiple–Choice Questions 67 Essay Questions 73 Chapter Seven The Value of Patience 77 Multiple–Choice Questions 77 Essay Questions 82 Chapter Eight The World’s Greatest Investor 85 Multiple–Choice Questions 85 Essay Questions 95 PART II ANSWERS Chapter One A Five–Sigma Event: The World’s Greatest Investor 99 Answers to Multiple–Choice Questions 99 Essay Answers 102 Chapter Two The Education of Warren Buffett 107 Answers to Multiple–Choice Questions 107 Essay Answers 112 Chapter Three Buying a Business: The Twelve Immutable Tenets 119 Answers to Multiple–Choice Questions 119 Essay Answers 127 Chapter Four Common Stock Purchases: Nine Case Studies 139 Answers to Multiple–Choice Questions 139 Essay Answers 148 Chapter Five Portfolio Management: The Mathematics of Investing 163 Answers to Multiple–Choice Questions 163 Essay Answers 170 Chapter Six The Psychology of Investing 181 Answers to Multiple–Choice Questions 181 Essay Answers 186 Chapter Seven The Value of Patience 193 Answers to Multiple–Choice Questions 193 Essay Answers 196 Chapter Eight The World’s Greatest Investor 201 Answers to Multiple–Choice Questions 201 Essay Answers 207 About the Authors 213

ROBERT G. HAGSTROM is one of the best-known authors of investment books for general audiences. He has written nine books, including the New York Times bestselling The Warren Buffett Way and The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy . He is also the author of The NASCAR Way: The Business That Drives the Sport, The Detective and the Investor: Uncovering Investment Techniques from the Legendary Sleuths , and Investing: The Last Liberal Art . Robert is a graduate of Villanova University with a BA and MA and is a Chartered Financial Analyst. He lives with his family in Villanova, Pennsylvania. Visit Robert's website at www.RobertHagstrom.com. RUSSELL RHOADS, CFA, is an instructor for the Options Institute at the Chicago Board Options Exchange. He teaches about ninety classes a year and conducts webinars on behalf of the CBOE and a variety of brokerage firms. Rhoads's twenty-year trading career has included positions at a variety of trading firms and hedge funds. His background includes trading and analysis, and he is the author of the Wiley titles Trading VIX Derivatives, Candlestick Charting For Dummies , and Option Spread Trading . Rhoads graduated with an MS in finance from the University of Memphis and a master's certificate in financial engineering from the Illinois Institute of Technology.