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