Excess Returns · Tuesday, July 28, 2026
Robert Hagstrom highlights Warren Buffett's focus on understanding the underlying business rather than just looking at financial statements. He contrasts this with a 'grade B' intelligence that relies solely on numbers, emphasizing that 'grade A' intelligence involves a deep comprehension of the business itself.
“There's a difference between knowing something and actually understanding it. And I think that's what Warren Buffett talks about all the time when he talks about the difference between grade A intelligence and grade B intelligence.”
“And, you know, the grade B intelligence is just reading the ledger, looking at the numbers, looking at the book value and the earnings. And A intelligence is really understanding the business.”
“We almost don't have to know the dealers have to care. What kind of business we own?”