Robert Hagstrom, Legg Mason – ‘Investing: The Last Liberal Art’


Robert is the author of The Warren Buffett Way and Portfolio Manager for Legg Mason, Inc. (NYSE:LM).


  • Noted Munger’s 2007 USC commencement speech
    • Attempted to diagram the liberal arts of investing


  • Isaac Newton
    • Wrote Principia Mathematica
    • People latched onto physics model for how things work
    • Chesterton wrote …”nearly reasonable, but not quite…” (like EMT)
  • Markets more like Biology than Physics
    • Learns and adapts
    • No stable mean
    • Non equilibrium system
    • Recommended book ‘Origin of Wealth’ Eric Beinhocker
  • Need paradigm shift in economic thinking
    • Alfred Marshall gave the biology analogy in the 1920’s
    • Thomas Kuhn ‘Structure of Scientific Revolution’ (old model resists the new)
  • Ludwig Wittgenstein
    • Not a straight line & changes constantly


  • The meaning of a word is its use in the language
  • Description of Amazon
    • Barnes & Noble wrong….
    • Wal Mart model wrong….
    • Dell model closer….
      • Amazon is the second largest cloud space provider
      • Potential new BIG business
  • “Failure to explain is caused by failure to describe” -Mandelbrot
  • ‘How to Read a Book’ Mortimer Adler (cannot read everything, pare down)
    • Inspectional (taste)
    • Systematical (skim)
    • Analytical
    • Synoptical
  • Risk tolerance (must get it indirectly because people cannot describe themselves accurately)
    • Gender
    • Age
    • Achievement motivation
    • Personal control orientation
    • How you view the risk environment
      • Complex
      • Trustworthy
      • Fear of Loss
      • Inability to persuade
  • Math (beware of averages)
    • Little thought to variables
    • Trend of the system vs. trend in the system
    • Data is non stationary
  • ‘Rethinking Undergraduate Business Education’ Aspen Institute
    • Catching up with Munger


  • Q&A
    • Paradigm Shift?
      • Physics model to Biology model
  1. 70’s/80’s Inflation comparison?
  • Businesses had better pricing power then vs. now
  • More global now


Value Investor Conference: Omaha, Nebraska – 

Dustin Hunter, SunRift Capital Partners (

(These notes are to the best of my recollection.)