The Midas Touch

Train, an investment manager and writer, produced one of the earliest book-length treatments of Warren Buffett's method, published in 1987 when Buffett was known to professionals but not yet a public figure. It is short.

Train organises Buffett's approach around a small number of principles: buy businesses rather than stocks, insist on a business you can understand, require a durable competitive position, demand honest and capable management, buy at a price that leaves a margin of safety, and hold indefinitely. He explains the transition from Graham-style statistical bargains to the purchase of high-quality franchises at fair prices, and credits Charlie Munger and the See's Candies purchase with the shift. He also covers the mechanics of using insurance float as investment capital, which is the structural feature that distinguishes Berkshire from a fund.

The material rests on Buffett's shareholder letters, on Train's own conversations, and on the public record of Berkshire's holdings up to the mid-1980s.

Everything here has since been covered in more detail by Hagstrom, Lowenstein, Schroeder and by the letters themselves, which are freely available. The book's value now is largely historical, as evidence of how Buffett's method was understood before the industry built a literature around it. The portfolio examples stop in 1986 and the treatment of Berkshire's operating businesses is thin.

American investment adviser who founded Train, Smith Counsel and wrote profiles of the era's leading money managers.

The Money Masters profiled Buffett, Graham, Templeton and Price while several were still working, setting out each manager's method in a few pages and establishing the format every later investor-profile book uses. Famous Financial Fiascos covers the reverse case, running through manias and frauds from the tulip trade onward.

Train, Smith Counsel